viewExam5 - M.A. and B.Sc. Examination School of Economics...

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M.A. and B.Sc. Examination School of Economics & Finance EC1002 Microeconomics January 2007: Time allowed – 2 hours This paper has two sections. Answer ALL questions in Section A [60% of the marks]. Answer ALL the questions Section B [40% of the marks]. SECTION A This counts for 60% of the overall marks. There are twenty questions. Each question is equal valued. Write your answers on the first page of the examination booklet provided. 1. If razors and blades are complements, which of the following must be true for both goods? a) Own-price elasticity of demand is 0. b) Income elasticity of demand is negative. c) Income elasticity of demand is positive. d) Cross-price elasticity of demand is negative. e) Cross-price elasticity of demand is positive. (Please turn over for Question 2)
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2 2. Refer to the diagram below. When Price =50 and Quantity = 200, which of the following statements are correct? a) The slope of the demand curve is -0.2. b) The price elasticity of demand is 1. c) The price elasticity of demand is -0.25. d) The equation relating price and quantity is: P = 100 - 4 Q . e) The equation relating price and quantity is: Q = 400 - 2 P . (Please turn over for Question 3)
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3 3. Although indifference curves are usually convex to the origin, there are cases where this might not be true. Which of the diagrams below is matched to which of the following statements? a) x and y are right shoes and left shoes. b) x is a “bad” (like risk) and y is a good (like yield). c) x and y are two brands of a good that the consumer cannot tell apart. y yy x x x (a) (b) (c) Diagram (a) and statement _______________ Diagram (b) and statement _______________ Diagram (c) and statement _______________ 4. Consider the following table of data facing a profit-maximising firm. (The additional columns are provided for use in answering the question.) Output Price Total Revenue Total Cost Marginal Revenue Marginal Cost Profit 0 9 0 6 1 8 8 10 2 7 14 12 3 6 18 14 4 5 20 18 5 4 20 25 6 3 18 36 Complete the following statements: Profits are maximised at an output of _______________ Marginal revenue _______________marginal cost at that output level.
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This note was uploaded on 05/20/2010 for the course MARKETING 107 taught by Professor Vivian during the Spring '10 term at SCA NC.

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viewExam5 - M.A. and B.Sc. Examination School of Economics...

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