ECO204_2009_Test_1_solutions

ECO204_2009_Test_1_solutions - ECO 204 2009 2010 Test 1...

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ECO 204, 2009 - 2010, Test 1 Solutions This test is copyright material and may not be used for commercial purposes without prior permission University of Toronto, Department of Economics , ECO 204 2009 2010 . Ajaz Hussain Test 1 Solutions FILL OUT INFORMATION AS IT APPEARS IN ROSI LAST NAME: FIRST NAME: MIDDLE NAME: U TORONTO ID #: SIGNATURE: SCORES Question Points Score 1 20 2 10 3 25 4 45 Bonus Question 5 TOTAL SCORE OUT OF 100 YOU MUST STAY SEATED DURING THE LAST 10 MINUTES OF THE TEST ‐‐ WAIT UNTIL ALL TESTS ARE COLLECTED ALL PARTS ARE WORTH 5 POINTS. ONLY AID ALLOWED: A CALCULATOR. FOR YOUR CONVENIENCE, THERE IS A WORKSHEET AT THE END OF THIS TEST KEEP ANSWERS BRIEF . TO EARN CREDIT, SHOW CALCULATIONS AND GIVE ARGUMENTS TO SUPPORT YOUR ANSWERS Good luck! Page 1 of 20 S . Ajaz Hussain, Dept. of Economics, University of Toronto
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ECO 204, 2009 - 2010, Test 1 Solutions This test is copyright material and may not be used for commercial purposes without prior permission Question 1 Please answer the questions following this article. WALL STREET JOURNAL, OCTOBER 29 TH , 2009 HIGH PRICE FOR IPHONE IN CHINA WILL TEST THE APPETITE FOR APPLE Page 2 of 20 By LORETTA CHAO BEIJING—Apple Inc. is a master at creating buzz around its product launches. But as the popular iPhone approaches its official debut in China—the world's largest mobile-phone market—consumers here seem anything b excited. ut The buzz-killer is price. China Unicom (Hong Kong) Ltd., which will start selling the device Friday, is offering a version of the 32-gigabyte iPhone 3GS for 6,999 yuan ($1,024) without a service contract, which is the most popular way for people to purchase phones in mainland China. That compares with about the $800 consumers pay for the same product in nearby Hong Kong, which has different wireless carriers. When wrapped together with a service plan, as is generally done in the U.S., the phone will cost Chinese subscribers at least $3,120 over two years, compared with the roughly $2,600 cost for the same period for customers in the U.S. "It's too expensive," says Marco Bai, a teacher in Beijing. He currently uses a smart phone–a handset with souped-up functions like email and video–made by a Chinese domestic brand that cost him about $205. "There are many smart phones with similar functions" to the iPhone in China, he says. "And they are all cheaper." China has an estimated 710 million mobile-phone subscribers, according to government figures. But the average customer pays less than $15 for monthly service and only 7.5% of the handsets sold in the country last year were smart phones like the iPhone. The average smart phone in China costs about $350, estimates research firm IDC. But China's smart-phone market is growing quickly, as all three Chinese carriers this year have deployed
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ECO204_2009_Test_1_solutions - ECO 204 2009 2010 Test 1...

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