Econ 100A MT2 - Department of Economics University of...

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Department of Economics Spring 2008 University of California Prof. Woroch Economics 100A SECOND MIDTERM EXAM – Exam Code “A” INSTRUCTIONS : Print your name and SID, your GSI’s name and the above exam code letter on the front cover of your blue book. Put all your work in the blue book. A total of 100 points is possible. I. MULTIPLE CHOICE : For each of the following 8 questions, write the letter of the alternative that you believe correctly completes the statement. Each is worth 4 points for a total of 32 points. 1. The short-run supply curve for a profit-maximizing firm that operates in a perfectly competitive market: a) Coincides with its marginal cost curve above the minimum average nonsunk cost. b) Coincides with its marginal cost curve above minimum average variable cost when all fixed costs are sunk. c) Is unaffected by a change in fixed costs provided nonsunk costs remain unchanged. d) Is less price elastic than the firm’s supply curve in the long run. e) All of the above. 2. Which of the following statements is true? a) A firm’s producer surplus is equal to its economic profit in the short run and the long run. b) A firm’s producer surplus is measured by the area between the market price and the firm’s marginal cost curve when the firm has no fixed costs. c) Economic rent equals economic profit. d) Both (a) and (b) but not (c). e) Both (b) and (c) but not (a). 3. The change in an individual’s consumer surplus caused by a decrease in the price of a good equals: a) The difference between the “compensating variation” and the “equivalent variation” when the consumer has zero income effects. b) The area below the demand curve and above the original price. c) The area below the demand curve and above the new, lower price. d) The change in the price times the quantity purchased when demand is perfectly price inelastic. e) None of the above.
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Econ 100A MT2 - Department of Economics University of...

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