midB-302_SP10_TOOSSIS - Midterm Version B March 17 2010...

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Midterm Economic 302 Name: Version B Instructor: Toossi Net-ID: March 17 2010 Section: Before beginning the exam, please verify that you have 9 pages with 40 questions in your exam booklet. On Your scantron sheet, you must place your full name, university ID number, Net-ID & section number. Make sure you bubble in the correct exam version. Please choose the BEST response to the following questions and record your answers on the scantron sheet provided with a number 2 pencil . Only answers marked on the scantron will be counted. Good Luck! Use the following to answer questions 1-3: Let supply be given by P = 2+ 3Q and demand by P = 14 -Q. Suppose we now place a tax of 4 per unit of output on the seller. 1) The price that seller receives after tax is A) 2 B) 11 C) 10 D) 8 2) What is the tax share of the buyer? A) Sellers bear all the burden of the tax. B) 1/4 C) 3/4 D) buyers bear all the burden of the tax 3) What is the deadweight of taxation? A) 4 B) 8 C) 6 D) 2 4) Assume market for meat is a free competitive market with the usual negatively sloped demand and positively sloped supply curves. A socially conscious student has decided to reduce his meat consumption by ten pounds per month. True or False : That way, there will be ten more pounds of meat each month for somebody else to eat. A) True B) False 1
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Use the following information to answer questions 5-6: Suppose consumer has to choose between the composite good F (P F =$1 /unit) and gasoline, G. Assume P G =$2 /gallon, the consumer income is $180/mo and his utility function is: U (G, F) = 5 . 0 5 . 0 F G + . 5) What is the equation of the income consumption curve (ICC)? A) F = 2G B) G = 2F C) G = 4F D) F = 4G 6) How much gasoline the consumer is going to consume? A) G* = 30 B) G* = 15 C) G* = 16.4 D) G* = 45 7) The market demand for a gallon of mineral water is P = 20 – Q. What price maximizes the producer’s revenue? A) 10 B) 15 C) 5 D) 8 8) Mike spends all his income on tennis balls and basketball tickets. His demand for tennis balls is inelastic. If the price of tennis balls rises (assume price of basketball tickets remain constant), A) He consumes more basketball tickets. B) He consumes less basketball tickets. C) His consumption of basketball does not change. D) We can be certain he will only buy basketball tickets. E) There is not enough information. 9) If the demand function for city bus rides is P = 100 - 10Q and the present price of a ride is 50, then A) raising prices will increase city revenue. B) raising prices will decrease city revenue. C) raising prices will not change city revenue. D) from the information given it is not clear what would happen to city revenue if price is increased. 10)
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This note was uploaded on 02/14/2011 for the course ECON 302 taught by Professor Avrin-rad during the Spring '09 term at University of Illinois, Urbana Champaign.

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midB-302_SP10_TOOSSIS - Midterm Version B March 17 2010...

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