moree3prac - Name_ EXAM THREE PRACTICE Introduction to...

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Name__________________ EXAM THREE PRACTICE Introduction to Microeconomics ECO 304K Dr. Trinque Part One: Memorization 1. Define deadweight loss. (3 points) 2. List the reasons the capitalist model requires income inequality. (9 points) 3. List the assumptions used to define monopoly. (8 points) Part Two: Application 4. Bubba’s Bagels operates under monopolistic competition. Bubba’s loyal customers are of two types: one group regularly buys the “premium” bagels for $1.25 each, while the other typically chooses the “day old” bagels at 70¢ each. Bubba has a secret: the “day old” bagels are not. Each morning, Bubba makes a bunch o’ bagels then randomly divides the batch into “premium” and “day old” categories. Explain why Bubba does this, and why he hopes the secret never gets out. [Answer as completely, and clearly, as possible. Use the given information to describe relevant aspects of Bubba’s consumers.] (20 points) 5. A movie theater has constant marginal cost of $5 per customer. The regular ticket price is $15, but students and senior citizens pay just $6. On a typical
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This note was uploaded on 03/24/2008 for the course ECON 304K taught by Professor Ledyard during the Spring '08 term at University of Texas at Austin.

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moree3prac - Name_ EXAM THREE PRACTICE Introduction to...

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