Econ_Sample_Exam_Answers

Econ_Sample_Exam_Answers - exceeds the cost to sellers....

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ARE 201 Sample Final Exam Answer Sheet MULTIPLE CHOICE (2 points each) 1. c 2. c 3. c 4. a 5. b 6. a 7. c 8. a 9. a 10. d 11. c 12. c 13. b 14. b 15. b 16. a 17. d 18. d 19. c 20. c 21. a 22. c 23. b 24. b 25. d 26. d 27. b TRUE/FALSE (2 points each) 1. T 2. T 3. F 4. T 5. T 6. T 7. F 8. T 9. F SHORT ANSWER 1
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APPLICATION/SCENARIO (6 points for No.1 and 11 points each for No.2 and No.3) 1. ANSWER: A positive externality leads the market to exchange a smaller quantity than is socially desirable. The government could help eliminate this inefficiency by subsidizing the product. 2. ANSWER: a. 40 b. $10.00 c. $80.00. d. 40 e. $5 f. $200 g. It would fall from $80 to only $20. h. It would fall from $120 to only $30. i. At quantities less than the equilibrium quantity, the value to buyers
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Unformatted text preview: exceeds the cost to sellers. Increasing the quantity in this region raises total surplus until equilibrium quantity is reached. At quantities greater than the equilibrium quantity, the cost to sellers exceeds the value to buyers and total surplus falls. 3. ANSWER: Nobody owns the salmon, while private individuals own goldfish. Profit motivations lead to different allocations of the resources. Salmon fishermen have an individual incentive to catch as many salmon as possible before somebody else does. Pet shop owners have a profit incentive to breed goldfish to sell to consumers. 2...
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This note was uploaded on 05/11/2011 for the course ECON 201 taught by Professor Staff during the Spring '08 term at N.C. State.

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Econ_Sample_Exam_Answers - exceeds the cost to sellers....

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