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ECONOMICS 100 SAMPLE TEST 2 SAMPLE TEST A few students have asked me to post Sample Test 2 so you can work on it over the holiday break (we’ll call them Eager Beavers!). In response to the Beavers, here is a previous Test 2 from the Wolfson Archives. Some of you may instead choose to try each of these questions shortly after the associated topic has been completed in class, as a check on your understanding (Slow and Steady Types). Others may want to wait until the week before the test to try this sample in a simulated setting i.e., all in one sitting; no notes or books; maximum time of 90 minutes (Last Minute Types). Whatever type you are, remember that practice is what is needed i.e., doing problems. There are 6 questions of unequal value: 1. 24 2. Dial M For Monopoly 20 3. Bottled Water 12 4. Trade in Bacon and Muffins 20 5. Short Discussion 16 6. Multiple Choice 8 TOTAL 100 NOTES At the time of the break in December, we had covered the materials for Questions 1, 2 and 5.1. After you prepare for tutorial #6 (first week back in January), you should be ready to tackle Question 3. Answers will be provided on the web during the week of January 20th. The contents of the upcoming Test 2 will be determined by how far we get in the lectures; the topics could be more or less than the ones contained in this sample test. Note that Sample Test 1 contained a question on the Theory of the Firm, a topic that is included in Test 2.
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Widgets and Shmoos in Competition (24 marks) Widgets are produced by a constant cost, perfectly competitive industry initially in long run equilibrium. Each firm is subject to the traditional U-shaped cost curves. 1.1 In the space below show the initial equilibrium position for the industry and a typical firm. Be sure to indicate all the relevant information including price, quantity, profits, number of firms. 1.2 Now the government imposes a $2.00 excise tax on widgets (i.e. for every widget sold, the seller must pay $2.00 to the government). In the space below, redraw the original short run equilibrium and show the impact of this tax in the short run only for a typical firm and the industry. Hint: think of the tax as a new "mandatory input" which must be paid.
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This note was uploaded on 08/24/2010 for the course ECO 100 taught by Professor Indart during the Fall '08 term at University of Toronto.

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