Econ281-Beesley-Su08-Final-with-solns

# Econ281-Beesley-Su08-Final-with-solns - Econ 281 B1 Summer...

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Econ 281 B1 Summer 2008 Final Exam This exam has 40 MC questions, 37 marks in short answers and 3 regarding a reading, for a total of 80 marks. You have 2.5 hours. Good Luck. Instructor: Scott Beesley Name: ___________________________________ Student Number: ______________________________ 1. Suppose demand is given by Q d = 500 – 15P and supply is given by Q s = 5P . If the government imposes a \$15 price ceiling the excess demand will be A) 200 B) 225 C) 250 D) 275 2. Along a linear demand curve, as price falls A) The price elasticity of demand is constant, but the slope of demand falls. B) the price elasticity of demand approaches zero, but the slope is constant. C) the price elasticity of demand moves away from zero. D) the price elasticity is the same as the slope of the demand curve. 3. The assumption that more is better requires the consumer A) to rank any two baskets. B) to say that basket C is preferred to basket A if basket B is preferred to basket A and basket C is preferred to basket B . C) to rank a basket with more units of all goods higher than a basket with fewer units of all goods. D) to have a diminishing marginal rate of substitution. 4. An illustration of an indifference curve has: A) prices of the goods on the axes. B) quantities of the goods on the axes. C) price on the vertical axis, quantity on the horizontal axis. D) Price on the horizontal axis, quantity on the vertical axis. 5. If a consumer states that he is indifferent between receiving a gift certificate for \$10 at the local bookstore and receiving \$10 cash, we can infer that this consumer A) would spend less than \$10 at the bookstore. B) would spend at least \$10 at the bookstore. C) would spend more than \$10 at the bookstore. D) would spend exactly \$10 at the bookstore. Page 1

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6. Suppose all prices double and income triples. The budget line A) will become steeper. B) will become flatter. C) will shift in toward the origin. D) will shift out from the origin. 7. The consumer's demand curve can be obtained analytically by solving which two equations? A) MU x / MU y = P x / P y ; U = U where U is the initial level of utility. B) MU x / MU y = P x / P y ; P x X + P y Y = I C) P x X + P y Y = I ; U = U where U is the initial level of utility. D) MU x / MU y = P x / P y ; U = U where U is the final level of utility. 8. Suppose that a consumer's demand curve for a good can be expressed as P = 50 – 4Q d . Suppose that the market is initially in equilibrium at a price of \$10. What is the consumer surplus at the original equilibrium price? A) 100. B) 150 C) 200 D) 250. 9. For the production function Q = aK + bL , the equation for a typical isoquant is A) Qb L K a = B) Qa K L b = C) 2 Q K L = D) K aQ bL =− 10. The production function Q = KL exhibits A) increasing returns to scale.
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## This note was uploaded on 12/21/2010 for the course ECON 281 taught by Professor Beesley during the Fall '10 term at Rutgers.

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Econ281-Beesley-Su08-Final-with-solns - Econ 281 B1 Summer...

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