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100bmid2W10(A) - Econ 100B(Grossman)Winter 2010 Midterm 2...

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Econ 100B (Grossman)—Winter 2010 Midterm 2– Version A February 18, 2010 Instructions: This is a closed-book, closed-notes exam. No calculators or electronic devices are allowed. Please turn off and put away all phones and other electronic devices. There are 8 multiple-choice questions and two free-response questions. Answer as many as you can in the time allowed. I do not expect everyone to be able to answer all questions. If you get stuck on something, I suggest moving on and coming back later when/if you have time. If you have a question, please raise your hand. Good luck! Multiple choice – 25 out of 50 pts. (8 qns., 3 pts. each + 1) Answer these questions on your Scantron. Your score will only be based on the marks on your Scantron. You will not receive any credit for anything written on your exam paper. You will receive 1 point for correctly writing your name, perm number, version (A,B,C, or D), and TA’s name on your Scantron. 1. A profit-maximizing monopolist faces a constant marginal cost of $2 per unit. If, at the price she’s chosen, the price elasticity of demand is - 6 5 , what is the price? (a) 6 (b) 2 2 3 (c) 12 (d) 9 2. Livia has a monopoly on the robot market and faces inverse demand given by P = 20 - 2 q and a marginal cost of MC = q . What quantity does she produce? 3. The government imposes a tax of t = 10 per robot on Livia’s sales. By how much does her price increase?
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