301midterm

# 301midterm - NAME: ELON UNIVERSITY Department of Economics...

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NAME: ELON UNIVERSITY Department of Economics Monday, 03/13/2007 Econ 301-A / Spring 2007 Hakan TASCI MIDTERM EXAM There are 10 problem solving questions in this exam. You have 100 minutes to answer all questions. There are 100 possible points in this exam. The Honor Code is in effect. Sign at the bottom of the last page. Good Luck!!! Problem Solving: 1. You are in the market for a new refrigerator for your company’s lounge, and you have narrowed the search down to two models. The energy efficient model sells \$500 and will save \$25 at the end of each of the next five years in electricity costs. The standard model has features similar to the energy efficient model but provides no future savings. It is priced at only \$400. Assuming your opportunity cost of funds is 5 percent. Which refrigerator should you purchase? 1

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2. Suppose that total benefit and total cost from an activity are respectively given by the following equations. B(Q)= 150+28Q-5Q 2 and C(Q)=100+8Q a. Find marginal benefit and marginal cost b. Write out the equation for net benefit. What are the net benefits for Q=1? and Q=5? c. Write out the equation for marginal net benefits. What are the marginal net benefits for Q=1? and Q=5? d. What level of Q maximizes net benefits? 3. The demand for good X is given by Q d x = 1200 – 1/2Px + 1/4Py - 8Pz + 1/10M Research shows that the prices of related goods are given by Py=\$5900 and Pz=90, while the average income of individuals consuming this product is \$55000. a.
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## This note was uploaded on 04/12/2010 for the course ECON 303 taught by Professor Shrestha during the Fall '08 term at VCU.

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301midterm - NAME: ELON UNIVERSITY Department of Economics...

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