Midterm1answers 2008

Midterm1answers 2008 - Department of Economics University...

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Page 1 of 10 Department of Economics Professor Kenneth Train University of California, Berkeley Fall 2008 ECONOMICS 1 FIRST MIDTERM EXAMINATION October 6, 2008 ANSWER KEY – DO NOT DISTRIBUTE INSTRUCTIONS 1. Please fill in the information below: Student’s Name: _____________________________________ SID #: ____________________________________________ GSI’s Name: ________________________________________ Section Number (Day/Time):___________________________ 2. This exam starts at 12:08 pm and ends at 12:58pm. 3. If you finish early, please remain in your seat so that you do not disturb others. 4. When time is called, please stop writing and pass your exam to the aisle. Please stay in your seats until all the exams are collected. 5. There is a total of 100 points, 6 questions, and 10 pages (including this cover sheet) points for each question are in parenthesis. 6. NO BLUE BOOKS NEEDED . Please answer the questions in the space provided. If you need extra room to answer the questions, use the backs of the pages. 7. Calculators are not permitted. 8. Good Luck!!! DO NOT TURN THE PAGE UNTIL YOU ARE TOLD TO BEGIN THE EXAM
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Page 2 of 10 Question 1: TRUE, FALSE, UNCERTAIN. (24 points) For each question decide whether the statement is false, true or uncertain. Your grade is determined by your explanation; an answer without an explanation receives no credit. Use graphs when needed to complement your answer. a) (4 points) Consider a perfectly competitive market with an upward sloping supply curve and a perfectly inelastic demand curve. If the government decides to tax the production of the good with an excise tax per unit sold, the price of the good paid by consumers increase by the exact amount of the tax. TRUE: Because the consumer is inelastic, she will demand the same quantity no matter what the price. The producer is able to pass the entire value of the tax onto the consumer. Even though the tax is being collected from the producer the consumer is bearing the tax burden. b) (4 points) The invention of the wheel, the telephone, the internet, had increased world’s productivity through centuries. Each time these improvements generated movements along the world’s PPF curve by increasing the productivity of the sectors with more intense use of these resources.
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This note was uploaded on 08/13/2009 for the course ECON 1 taught by Professor Martholney during the Spring '08 term at Berkeley.

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Midterm1answers 2008 - Department of Economics University...

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