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M.A. and B.Sc. Examination School of Economics & Finance EC1002 Microeconomics January 2008. 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 3 marks. Write your answers on the first page of the examination booklet provided. 1. You are given the following data on the benefits and costs of a health screening programme, where the choice variable is the frequency of screening (i.e. the number of months between visits to the clinic) Months between visits Total cost per patient visit Total Benefit per patient 1 64 50 2 40 40 3 24 30 4 14 20 5 6 10 The optimal frequency of visits is: a. Once every month b. Once every two months. c. Once every three months d. Once every four months e. Never. 2. Given the following data Making pizzas per hour Delivering pizzas per hour Susan 12 6 Mike 10 15 Which of the following allocations is the most efficient? a. Susan and Mike both make and deliver pizzas. b. Mike makes pizzas and Susan delivers them. c. Susan makes pizzas and Mike delivers them. d. None of the above. (Please turn over for Question 3)
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3 3. If the price of new cars falls, what will be its impact on the market for used cars? a. The quantity of used cars demanded will remain the same. b. The quantity of used cars demanded will increase. c. The quantity of used cars demanded will decrease. d. The demand curve for used cars will shift to the right. e. The demand curve for used cars will become more inelastic. 4. Refer to the diagram below. When Price (P) = 200 and Quantity (Q) = 50, which of the following statements is correct? a. The price elasticity of demand is - 4. b. The price elasticity of demand is - 1. c. The price elasticity of demand is - 0.25. d. The slope of the demand curve is - 0.25. e. The equation relating price and quantity is P = 400 – ¼Q. 400 50 200 100 Pr ice Quantity (Please turn over for Question 5)
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4 5. Zoe’s utility from consuming various quantities of Coffee and Buns is shown in the following table: Quantity Total Utility from Coffee Total Utility from Buns 1 20 16 2 30 30 3 36 42 4 40 52 5 42 60 Zoe is a rational consumer and has a fixed sum of money to spend: £6. Which of the following statements is true? a. When the price of coffee and the price of buns is £1, she consumes 4 coffees and 2 buns. b. When the price of coffee and the price of buns is £1, she consumes 2 coffees and 2 buns.
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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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viewExam2 - M.A. and B.Sc. Examination School of Economics...

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