101_Sample_Final_Q_05

101_Sample_Final_Q_05 - Economics 101 Sample Final...

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Economics 101 Sample Final Examination QUESTIONS 1-2 REFER TO THE DIAGRAM BELOW. $ D 60 MC 40 30 20 60 20 30 Quantity 15 45 15 1. Relative to the consumer surplus that would result at the socially optimal quantity and price, how much consumer surplus is lost from Kevin selling at the monopolist’s profit-maximizing quantity and price? a. $450 b. $250 c. $125 d. $0 e. None of the above. 2. What amount of total surplus would result if Kevin could act as a perfectly price discriminating monopolist? a. $900 b. $200 c. $450 d. $0 e. None of the above. 3. Consider the diagram below. Player 1 makes his/her decision at A and player 2 makes his/her decision at B or C depending on what player one decided. If the payoffs for each are as shown, what is the equilibrium of this game? (U is Up and D is Down) 100 for 1 105 for 2 -50 for 1 155 for 2 150 for 1 200 for 2 500 for 1 -5 for 2 C B A Up Down U D U D a. 1 goes Up, 2 goes Down. b. 1 goes Up, 2 goes Up. c. 1 goes Down, 2 goes Up. d. 1 goes Down, 2 goes Down. e. There is no equilibrium. 4. Richard and Charlotte are prospectors for gold. If they search in different locations, they will both be rewarded with plentiful discoveries. However, if they both go to the same location, they will have to share the gold there. Without communicating with one another, they must decide simultaneously between locations A or house B. If their payoff matrix is as given below, which of the following statements is true? Charlotte Go to A Go to B Richard Go to A 3 for Richard 3 for Charlotte 8 for Richard 4 for Charlotte Go to B 4 for Richard 6 for Charlotte 2 for Richard 2 for Charlotte a. The only Nash equilibrium of this game is that both go to A. b. The only Nash equilibrium of this game is that Richard goes to B and Charlotte to A. c. The only Nash equilibrium of this game is that Richard goes to A and Charlotte to B. d. This game has no Nash equilibrium. e. This game has more than one Nash equilibrium. 5. If Charlotte and Richard could negotiate costlessly with one another before deciding, which combination would they choose? a. Both will go to A. b. Richard goes to B and Charlotte to A. c. Richard goes to A and Charlotte to B. d. Both will go to B. e. There is no reason for them to negotiate. 6. A single-price, profit-maximizing monopolist faces a demand curve of P=16-3Q and a marginal cost curve of MC=2Q . What are the monopolist’s optimal price and quantity? a. P=$4, Q=2 b. P=$7, Q=3 c. P=$3, Q=3 d. P=$10, Q=2 e. None of the above. 7. In the above question what is the monopolist’s economic profit if fixed costs are $10? a. $16 b. $10 c. $6 d. $0 e. None of the above.
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8. Consider the demand curve P D =20-Q, and the supply curve P S =Q. By how much would economic surplus be reduced by the imposition of a price ceiling of 6 in this market? a.
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This note was uploaded on 03/27/2008 for the course ECON 1110 taught by Professor Wissink during the Spring '06 term at Cornell.

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101_Sample_Final_Q_05 - Economics 101 Sample Final...

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