Second+Exam+v1+_with+answers_

Second+Exam+v1+_with+answers_ - v1 Name_ UMID_ Winter 2009...

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v1 Name___________________________ UMID___________________________ Winter 2009 First Exam Economics 101 The University of Michigan NOTES: (a) For each question, a correct answer is worth 5 points, no answer is worth 1 point, and an incorrect answer is worth 0 points. (b) Given that the exam has 30 questions, the maximum possible score is 150. (c) Given that each question has 5 possible answers, a wild guess will earn 1 point on average, the same number of points earned by providing no answer. Guessing only gives you a better return than leaving the question unanswered if you can eliminate at least one answer (in which case a guess will earn more than 1 point on average). (d) The use of calculators, cell phones, personal digital audio players, or any other electronic devices will not be permitted during the exam. (e) Have your UMID with you at all times during the exam. (f) In order for your scantron to be correctly graded, you must fill in the version number of your exam (see the upper left corner of this page) on the scantron. (g) When you are done with the exam, you will turn in this page (with name and UMID filled in) along with your scantron. (h) Unless a question explicitly notes otherwise, assume that all supply and marginal cost curves slope upward and that all demand and marginal value curves slope downward.
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___ Suppose an ample supply of metered parking spaces is provided in Ann Arbor, so that nobody is ever unable to find a parking space. Also suppose that demand for those parking spaces depends upon the price of the metered parking space, the price of gasoline and the fare paid to ride the bus (among other things). If the price elasticity of demand is -1.0, the cross-price elasticity of demand with respect to the price of gas is -2.0 and the cross-price elasticity of demand with respect to the bus fare is 0.5, then a 10% increase in the bus fare is likely to: (a) increase parking meter revenues by approximately 5%; (b) reduce parking meter revenues by approximately 5%; (c) have no effect on parking meter revenues; (d) increase parking meter revenues, but the size of that increase cannot be estimated from this information; (e) decrease parking meter revenues, but the size of that decrease cannot be estimated from this information. 2. _ __ In the market depicted below, a production tax of $50/unit is imposed. As a consequence, output in this market will be: a) greater than the efficient level, since the tax imposed is smaller than the marginal external damage sustained at the efficient output level. b) less than the efficient level. A production tax always reduces output below the efficient level. c) less than the efficient level, since the tax imposed is greater than the marginal external damage sustained at the efficient output level. d) equal to the efficient level.
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This note was uploaded on 01/17/2011 for the course ECON 101 taught by Professor Gerson during the Winter '08 term at University of Michigan.

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Second+Exam+v1+_with+answers_ - v1 Name_ UMID_ Winter 2009...

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