final exam 04 - YORK UNIVERSITY Arts Economics 2300 D Barry...

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YORK UNIVERSITY Arts Economics 2300 D: Barry Smith Final Exam Spring 2004 Instructions . The exam consists of 8 questions. You must answer any 6 of these questions. Each is worth 10 marks. If you answer more than 6 questions, only the first 6 will be graded. You have 3 hours to complete this exam so, on average, you have 30 minutes to complete each question. Write your answers in the exam booklets that have been supplied to you. Be sure to provide the information requested at the front of the exam booklets. 1. Suppose a competitive market has a Demand function: P = 16 - 2 Q and a Supply function: P = 2 Q . (a) Solve for the equilibrium price and quantity. (b) Compute the elasticity of demand in equilibrium (c) Suppose a per unit tax of $4 is levied. Compute the new equilibrium. (d) On a graph show the new and old equilibria. (e) Calculate the change in Consumers’ Surplus resulting from the tax. 2. Provide careful explanations of the following two statements:
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final exam 04 - YORK UNIVERSITY Arts Economics 2300 D Barry...

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