fall 2007 exam 5

# fall 2007 exam 5 - ECON 2106 Shelby Frost Exam 3 1:00pm TR...

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ECON 2106 Shelby Frost Exam 3 1:00pm TR Fall 2007 Version A Version A Page 2 This page is left blank intentionally.
Shelby Frost Exam 3 1:00pm TR Fall 2007 Version A Version A Page 3 Name: __________________________ Date: _____________ 1. Chuck spends all his income on two goods: tacos and milkshakes. His income is \$100, the price of tacos is \$10, and the price of milkshakes is \$2. If Chuck purchases 10 milkshakes, he can purchase ______ tacos. A) 8 B) 18 C) 50 D) 10 2. Suppose the dry-cleaning market is monopolistically competitive and economically profitable this year. In the long run, the demand for any one firm's dry-cleaning services will _____ as more firms enter the industry, causing profits to _____. A) increase; increase C) decrease; fall to zero B) decrease; become economic losses D) not change; fall Use the following to answer question 3: Table: Prices and Demand Quantity of hats demanded Price per hat 0 \$30 1 28 2 26 3 24 4 22 5 20 6 18 7 16 8 14 3. (Table: Prices and Demand) Prof. Dumbledorr has a monopoly on magic hats. He sells at most 1 hat to each customer, and the accompanying table shows each customer's willingness to pay. The marginal cost of producing a hat is \$18. How many hats should Prof. Dumbledorr produce, and what price should he charge to maximize his profits? A)

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fall 2007 exam 5 - ECON 2106 Shelby Frost Exam 3 1:00pm TR...

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