Answers for the sample midterm questions. Multiple Choice: 1. B 2. C 3. A 4. C 5. D 6. A The point here is that while both surveys cost the same and you get the same number of returned surveys either way, the selection problem will probably be worse for the normal mail (40%) than the registered mail (80%). A 80% sample of the population will likely be more representative of the population as a whole than a 40% sample. 7. F 1 a) When we can set separate two part tariffs to both students and faculty, we can consider the two markets completely independently. In each market, we have a group of identical consumers, so the optimal two-part tariff involves charging p=mc and T=the consumer surplus at that price. So: For the students, set p = 0, T = 100 For the faculty, set p = 0, T = 400
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