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*** WRITE YOUR NAME AND CLASS DAY (MONDAY OR TUESDAY) ONLY ON THE BACK OF THE LAST PAGE *** UNIVERSITY OF CALIFORNIA HAAS SCHOOL OF BUSINESS EWMBA 201A—Economic Analysis for Business Decisions Fall 2006 Professor Catherine Wolfram MIDTERM EXAM Instructions: The number in brackets ( e.g., [5]) indicates the points for each question. Total: 90 points. Note that you also have 90 minutes to do the exam, so you should spend no more than 1 minute per point. Please Write Legibly. Briefly explain your answers (that is, don’t just write “yes” or “no” and don’t just write down a numerical answer without showing how you derived it). Write only on this exam. Short answer questions The following three questions require only short answers (1-3 sentences). Use any graphs that will help your explanation. Be sure to label graphs clearly. 1. [10] List three factors that you think will affect the demand for slots in the Haas Evening MBA program over the next several years. Discuss whether you think each factor will increase or reduce demand. Full credit will be given for answers that discuss factors that affect potential students’ income (e.g. a booming high-tech economy may mean more potential students decide they can afford the tuition, causing demand to shift out), demographics (e.g. baby bust hitting the age of a typical student, causing demand to shift in), tastes (e.g. fewer people decide they want to become lawyers, causing demand to shift out) or the price or availability of substitutes (e.g. presence of Wharton West causes demand to shift in). Points will most likely be taken off for factors related to the supply (e.g. the availability of slots) or for discussions of the price, since this affects the quantity demanded and not the demand.
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EWMBA 201a Fall 2006—Prof. Wolfram 2 2. [10] Bob runs a window washing service operating out of Walnut Creek, CA. Bob’s company is one of the largest in the East Bay, and he has many customers who have used his service for a number of years, so he believes that he faces a downward sloping demand curve. Recently, he lowered his price per window and, while he got more window washing jobs, his total revenue fell. He is quite sure that nothing caused his demand to shift. Explain why this might have been the case. If Bob had been operating at a part of his demand curve where demand was inelastic, than lowering his price would cause his total revenue to fall. 3. [10] The upcoming Leonardo DiCaprio movie “The Blood Diamond” is designed to
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This note was uploaded on 09/15/2009 for the course EWMBA 201A taught by Professor Wolfram during the Fall '07 term at University of California, Berkeley.

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