FinalF09 - ECO 304K INTRODUCTION TO MICROECONOMICS Unique...

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1 ECO 304K: INTRODUCTION TO MICROECONOMICS Unique # 33645 Fall 2009 Prof. Wiseman Final Exam Instructions: 1. Please PRINT CLEARLY your name and UT EID number here: ____________________________________________________________ 2. On your Scantron answer sheet, please record the following information: a. Your name b. Test form (as indicated above) c. UT EID (aligned left, in the section labeled “Identification”) 3. The exam should include 11 pages (counting this cover sheet), plus two additional pages of blank scratch paper. If your exam is missing any pages, please raise your hand. 4. Answer each question by choosing the single best answer. Mark your chosen answer on your Scantron answer sheet with a #2 pencil. Press firmly and fill in the entire bubble. Light answers will be counted as wrong. Multiple answers will be counted as wrong. 5. When you turn in your answers, tear off this cover sheet and turn it in with your Scantron answer sheet. You may keep the rest of the exam. All answers must be turned in by the end of the exam period. Late exams will get a score of zero. 6. You are a good economist. Allocate your time accordingly – do the easy questions first. Please do not cheat. 7. Scores for the exam are as follows: # Correct Score # Correct Score # Correct Score 41 100 27 75 13 48 40 99 26 73 12 46 39 97 25 71 11 44 38 95 24 69 10 40 37 93 23 67 9 36 36 91 22 65 8 32 35 89 21 63 7 28 34 87 20 61 6 24 33 86 19 59 5 20 32 84 18 57 4 16 31 82 17 55 3 12 30 80 16 53 2 8 29 78 15 52 1 4 28 76 14 50 0 0
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2 1. Suppose that the demand curve for candy canes at the North Pole is the same as the demand curve at the South Pole. In both places, the competitive equilibrium price of candy canes is $2, and 3000 canes are consumed each day. Suppose that both places introduce a subsidy for candy cane sales; at the North Pole, the subsidy is $0.50 per cane, and at the South Pole it is $1 per cane. As a result, at the North Pole the price paid by buyers falls by $0.25; at the South Pole, the decrease is $0.60. At which pole did the quantity of candy canes consumed increase more? a) North Pole b) South Pole c) The increase is the same at both poles. d) The quantity decreases at both poles. e) More information is needed to answer. THE NEXT FOUR QUESTIONS ARE BASED ON THE FOLLOWING SITUATION: Consider the market for a good that generates harmful pollution. In particular, every unit of the good that is produced imposes $5 of pollution damage on society. Participating in this market are 35 consumers, each of whom will buy at most one unit of the good, and 36 suppliers, each of whom will sell at most one unit of the good. The distribution of buyer values is as follows: Buyer Value Number of Buyers $ 6 1 0 $ 9 1 5 $13 10 The distribution of seller costs is as follows: Seller Cost Number of Sellers $ 4 9 $ 7 9 $11 9 $14 9 2. Without any intervention in this market, what are the competitive equilibrium price P* and quantity Q*? a)
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This note was uploaded on 02/14/2010 for the course ECO 304K taught by Professor Hickenbottom during the Spring '10 term at University of Texas.

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FinalF09 - ECO 304K INTRODUCTION TO MICROECONOMICS Unique...

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