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M.A. and B.Sc. Examination School of Economics & Finance EC1002 Microeconomics January 2009. Time allowed: 2 hours The paper has TWO sections. Answer ALL questions in Section A [60 marks]. Answer ALL questions in Section B [40 marks]. (Please turn over for Section A)
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2 SECTION A This counts for 60 marks. There are twenty questions. Answer ALL questions. Each question carries the same weight and there is only one correct answer. Write your answers on the first page of the examination booklet provided. (For example, if you think that A is the correct answer to question 1, write 1: A.) 1. You should always expand the scale of an economic activity if: (A) Total benefit exceeds total cost (B) Average benefit exceeds marginal cost (C) Marginal benefit exceeds average cost (D) Marginal benefit exceeds marginal cost (E) Average benefit exceeds average cost 2. Smith and Jones comprise a two-person economy. Their hourly rates of production are shown below. Smith Jones Computers 10 6 Calculators 100 120 By coordinating their production decisions, the maximum number of computers Smith and Jones can produce per hour is A) 120. B) 100. C) 16. D) 10. E) 6. 3. If a nation has an absolute advantage in the production of newsprint, then it A) must also have a comparative advantage. B) will always produce enough for domestic consumption. C) will never produce newsprint. D) may or may not have a comparative advantage. E) must also have an absolute advantage for other paper products. 4. When the price of a good is above its equilibrium value, A) consumers will bid the price up. B) excess demand will occur. C) it will tend to stay above the equilibrium value. D) suppliers will notice their inventories are shrinking. E) suppliers will lower the price. (Please turn over for Question 5)
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3 5. Price of steak per kilo (£) Anne’s quantity demanded Jeremy’s quantity demanded Matthew’s quantity demanded 3 5 10 19 4 3 8 13 5 2 6 9 6 1 4 7 7 0 2 5 If the price of steak decreases from £6 to £5, total revenues _________, suggesting market demand is ________. A) increase; elastic D) decrease; inelastic B) decrease; elastic E) remain constant; unit elastic C) increase; inelastic 6. For the supply curve described below, what is the price elasticity of supply when P= 10?
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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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viewExam3 - M.A. and B.Sc. Examination School of Economics...

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