ECN100 Final F08 Key Parman

ECN100 Final F08 Key Parman - Ecn 100 Intermediate...

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Unformatted text preview: Ecn 100 - Intermediate Microeconomic Theory University of California - Davis December 10, 2008 Professor John Parman Final Examination You have until 12:30pm to complete the exam, be certain to use your time wisely. For multiple choice questions, mark your answer on your scantron sheet. Choose only one answer for each multiple choice question; if more than one letter is chosen for a question it will be marked wrong. Write your answers for the short answer section directly on the exam. For the short answer questions, show your work clearly, place a box around final answers and be certain to label any graphs you draw. Final answers may be left as fractions. Non-graphing calculators may be used but they should not be necessary. Remember to put your name and ID number on both the exam (in the spaces provided below) and on the scantron sheet. Good luck! Name: ID Number: Section: SECTION I: MULTIPLE CHOICE (60 points) 1. The minimum of a firm’s average cost curve is at $20 and the minimum of the firm’s average variable cost curve is at $10. If the firm is operating in a competitive market where the price is $15, then in the short run: (a) The firm will shut down. (b) The firm will earn positive profits. (c) The firm will have positive producer surplus. (d) The firm will be producing more than it would if the price were $20. (c) The firm will produce because it can cover all of its variable costs and some of its fixed costs but it will lose money (since it can’t cover all of the fixed costs). So in the short run, the firm produced with negative profits but positive producer surplus. 2. An industry has three firms in it. Firms A and B each have individual supply curves given by S ( p ) =- 10 + 2 p and firm C has a supply curve given by S ( p ) = 4 p . The industry supply curve will have a kink at a price of: (a) $5. (b) $10. (c) $.25. (d) $.25 and $5. (a) Notice that firm C supplies at all postive prices. Supply from firms A and B goes to zero when the price hits $5. So there will be a kink in the industry supply curve at $5. 3. If a monopoly can use first degree price discrimination, the deadweight loss will be than if the monopoly cannot price discriminate and profits will be than if the monopoly cannot price discriminate. (You can assume the monopoly has constant marginal costs and the every consumer’s demand curve is a downward sloping line.) 2 Final Examination (a) Greater than, less than. (b) Greatern than, greater than. (c) Less than, less than. (d) Less than, greater than. (d) With first degree price discrimination, the monopoly can capture all of the consumer surplus. This means that the monopoly is earning the highest possible profits but is also producing at the efficient level of output implying zero deadweight loss....
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This note was uploaded on 10/22/2010 for the course ECN 100 taught by Professor Parman during the Fall '08 term at UC Davis.

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ECN100 Final F08 Key Parman - Ecn 100 Intermediate...

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