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Marketing 2018
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Chapter 19 / Exercise 5
Marketing 2018
Ferrell/Pride
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1 The Paul H. Nitze School of Advanced International Studies The Johns Hopkins University MICROECONOMICS SAMPLE FINAL EXAM You have 2 hours and 30 mnts to complete this exam. Total points available: 100. Plan your responses carefully, as points are awarded for correct and complete answers. Part A. Short Questions (6 points each; 30 points total). Please answer FIVE of the following SEVEN questions. You should fully explain your answers, including diagrams where appropriate. Points will be given based on your explanation. 1. Explain why price is always equal to minimum average cost in the long run in a perfectly competitive equilibrium. At such price, are firms adopting a profit-maximizing behavior? 2. China and Bangladesh produce microchips (M) and cotton t-shirts (TS). China has 20.000 units of labor, whereas Bangladesh has 5.000. Prior to trade, China consumes 100 units of M and 100 TS. Bangladesh consumes 2 units of M and 6 units of TS. The cost in terms of labor requirements to produce M and TS are given in the following table: Labor per M Labor per unit of TS China 5 Bangladesh 40 Which country has a comparative advantage in the production of each good? If China opens up to trade with Bangladesh, how many M and TS will it produce? Briefly discuss your answers. 3. In a monopoly, marginal revenue is smaller than price for every output level. Explain with the help of a graph. 4. Define the concept of natural monopoly and briefly explain: a) why it should be regulated; b) why regulating it through marginal cost pricing might not be a good idea. 5. Define second-degree price discrimination and explain why, possibly through an example, such practice might be welfare-enhancing when compared to uniform pricing. 6. Explain why a general economic equilibrium with production is reached when the MRT equals the MRS of the consumers 7. Describe the equilibrium in a Bertrand duopoly with homogeneous goods in which the marginal costs for Firm A and B are constant but different, with MC A < MC B . Motivate your answer. 10 20
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Marketing 2018
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Chapter 19 / Exercise 5
Marketing 2018
Ferrell/Pride
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2 Part B. Applied Theory Questions (30 points – 15 points each). Please answer TWO of the following THREE questions:

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