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Unformatted text preview: 1 ECMC02H Intermediate Microeconomics  Topics in Price Theory Term Test October 19, 2009 Time: 80 minutes Professor Gordon Cleveland ______________________________________ ____________________ Your name (Print clearly and underline your last name) Your student number 1. __________ 6. __________ 11. __________ 2. __________ 7. __________ 12. __________ 3. __________ 8. __________ 13. __________ 4. __________ 9. __________ 14. __________ 5. __________ 10. __________ 15. __________ This exam consists of TWO PARTS, both of which are to be answered in this exam booklet. For the first part , there are 15 multiple choice questions, each worth 5 marks, which are to be answered on this front sheet of the exam . Each question should be answered by indicating with a BLOCK CAPITAL LETTER the alternative that is correct (if you feel that a question is ambiguous or that no one answer is entirely correct, pick the answer which you believe to be the "best" answer). You will receive 5 marks for each correct answer, 0 for each wrong or blank response (thus you will not be penalized for wrong guesses). For the second part , there are two short answer and graphical problems. You should answer both of these questions; they are worth a total of 25 marks. These problems are provided at the end of the multiple choice questions, and you are to answer them in the space provided. If you make mistakes and need to redo the question, or if you need extra space for your answers, you can use the back of the pages, but clearly indicate that you are doing this below the question. The exam is out of 100. Your exam consists of 9 pages . FILL IN YOUR NAME NOW. 2 PART I  15 Multiple Choice Questions  75 marks 15. A firm in a perfectly competitive constant cost industry has total costs in the short run given by: TC = 2.5q 2 + 5q + 40 where q is output per day and TC is the total cost per day in dollars. The firm has fixed costs of $30 (already included in the TC equation above). The TC equation generates minimum average costs of $25 (per unit) at q = 4. You are also told that this size firm generates minimum long run average costs (that is, minimum LRAC occurs at q = 4, with min LRAC = $25). In the short run, there are 200 firms in this industry. Questions 1 through 5 concern this firm and this industry. 1. In the short run there are 200 firms in the industry, all with the same cost curves described above. Suppose that the demand curve facing the industry is given by the equation P = 125  .075Q where P is the price per unit and Q is the number of units demanded per day. The equilibrium price in the short run is: A) $25 B) $30 C) $35 D) $40 E) $45 F) $50 G) $55 H) $60 I) $65 J) none of the above 2. Continuing the situation described in question 1 (the short run, with 200 firms and demand given by P = 125  .075Q ), the profit earned by an individual firm per day in the short run is: A) $0 B) $50 C) $30 D) $20 E) $20 F) $30 G) $50 H) $70 I) $90 J) none of the above...
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This note was uploaded on 04/21/2011 for the course ECMC 02 taught by Professor Cleveland during the Fall '08 term at University of Toronto Toronto.
 Fall '08
 CLEVELAND

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