ARE 100B - Midterm 1 Key, version A (blue)

ARE 100B - Midterm 1 Key, version A (blue) - A RE 100B M ....

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ARE 100B SPRING 2009 M. Whitney YOUR NAME: ____________________________________ __ FIRST MIDTERM This exam has two sections. Section A consists of 10 multiple-choice questions, each worth 10 points. Total possible points in Section A = 100. Section B consists of 5 problems each worth 30 points. Partial credit is given for correct approach even if fmal answer is incorrect, so show your work! Total possible points in Section B = 150. Total points in this exam: 250
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SECTION A 1. A monopolist owns two plants with the following cost functions: TCa = 1000 + 500 qa + qa 2 TCb = 4000 + 600 qb Suppose the monopolist's optimal total output is Q = 200 units. What does this imply? ~ Plant a will produce 1/4 of the total output b. Plant a will produce ~ of the total input c. Plant a wiJJ shut down. d. Plant b will shut down. e. The optimal monopoly price will be $600. f. None of the above. Questions 2 and3 refer to the info below. A competitive firm's annual total costs are: TC = 2500 + 10q + q2 2. In long-run equilibrium, how many units of output does this firm produce? a. 10 b. 25 ~50 0.100 e. None of the above. 3. What is the long-run equilibrium price ofthis good? a.$30 b.$60 (e)$110 do $210 e.$300 f. None of the above. 4. For a monopolist, which of the following pricing strategies results in an efficient outcome, with no deadweight loss? © First-degree (perfect) price discrimination b. Second-degree price discrimination c. Third-degree price discrimination d. All of the above. e. None of the above, since all monopoly pricing strategies create a deadweight loss. 5. A monopolist charges $150 per treatment for a patented drug it sells. The cost of producing the drug is constant at $100 per treatment. What is the implied elasticity of demand for this drug? a.-l b. -1.5 c. -2 @-3 e. None of the above.
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This note was uploaded on 11/19/2009 for the course ARE ARE100B taught by Professor Chenguang during the Spring '09 term at UC Davis.

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ARE 100B - Midterm 1 Key, version A (blue) - A RE 100B M ....

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