econ 212 final - Name_ Econ 212 Final Exam Fall 2007 You...

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Name _____________________________ Econ 212 Final Exam Fall 2007 You are allowed access to three pages of notes and a calculator while completing the exam. Multiple Choice (16 points total 2 points each) Identify the choice that best completes the statement or answers the question. ____ 1. Ambrose has the utility function U ( x 1 , x 2 ) = . If Ambrose were initially consuming 4 units of nuts (good 1) and 27 units of berries (good 2), then what is the largest number of berries that he would be willing to give up in return for an additional 21 units of nuts? a. 5 b. 12 c. 6 d. 32 e. 3 ____ 2. The following can be said about the income and substitution effects of a price increase on the demand for a good whose price rose: a. The former is always positive and the latter is always negative. b. Both can be either positive or negative. c. While the latter is always negative, the former can be either positive or negative. d. While the former is always negative, the latter can be either positive or negative. e. The former can at times be negative, but it will never overwhelm the latter. ____ 3. A firm has the production function f ( x , y ) = x 1.20 y 2 . This firm has a. constant returns to scale. b. decreasing returns to scale and increasing marginal product for factor x . c. increasing returns to scale and decreasing marginal product for factor x . d. decreasing returns to scale and diminishing marginal product for factor x . e. None of the above. ____ 4. If the short-run marginal costs of producing a good are $40 for the first 200 units and $50 for each additional unit beyond 200, then in the short run, if the market price of output is $46, a profit-maximizing firm will a. produce a level of output where marginal revenue equals marginal costs. b. produce as much output as possible since there are constant returns to scale. c. produce up to the point where average costs equal $46. d. not produce at all, since marginal costs are increasing. e. produce exactly 200 units. 1
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____ 5. Goods 1 and 2 are perfect complements, and a consumer always consumes them in the ratio of 2 units of good 2 per unit of good 1. If a consumer has an income of $720 and if the price of good 2 changes from $8 to $9, while the price of good 1 stays at $1, then the income effect of the price change a. is 9 times as strong as the substitution effect. b. does not change demand for good 1. c.
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This note was uploaded on 01/26/2010 for the course ECONOMICS EC212 taught by Professor Yu during the Spring '08 term at Mt. Holyoke.

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econ 212 final - Name_ Econ 212 Final Exam Fall 2007 You...

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