2010FinalFall08Draft

2010FinalFall08Draft - Principles of Microeconomics...

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Principles of Microeconomics Professor Edward Morey ECON 2010-300 Final Exam December 18, 2008 Version A As a University of Colorado at Boulder student, I affirm that I have neither given nor received assistance on this exam. Name: ___________________________________ Date: ______________ Signature: ______________________________

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Questions that still need thought attention are 11 (the new graph in the answer key is not showing u), 21 (the answer is in yellow) Use the following to answer question 1. Figure: Demand and Supply of Gasoline 1. (Figure: Demand and Supply of Gasoline) The supply curve shifts from S 1 to S 2 . Which statement is most correct? A) at the old equilibrium price of \$2.50, there will be pressure for the price to fall. B) the new price will be \$2.00. C) the new quantity will be 300. D) all of the above are true. A: A) is correct, B and C are not Use the following to answer question 2. Figure: Aggregate Demand for Shirts
2. (Figure: Demand for Shirts) The price elasticity of demand for the segment BC using the midpoint method is: A) greater than 3.33 (absolute value). B) 3.33. C) 3. D) 0.33. C: the price elasticity of demand =( change in demand/average demand)/(change in price/average price) = (100/150) /(10/45) =4 5/15=3 The answer from my point of view is C. The KW says, the price elasticity of demand the percent change in the quantity demanded divided by the percent change in the price. 3. Assume you consume two commodities, pollution, which is a bad, and other stuff. Do your indifference curves for pollution and other stuff look the same as the indifference curves discussed in Krugman and Wells? A) Yes B) No C) Maybe B: If the other stuff are goods then the indifference curves are upward sloping, so not like in KW. If other stuff is bad, so two bads, the indifference curves are downward sloping but bend the opposite way from those in KW. Use the following figure to answer questions 4-5. Figure: A Perfectly Competitive Firm in Short Run 4. (Figure: A Perfectly Competitive Firm in the Short Run) At a price of G, the firm's total cost is represented by the area _____, and it’s profits are _________.

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A) FGLK, negative. B) FGLK , positive. C) 0FKD, negative. D) 0FKD, positive. D: Total costs are average costs at quantity D, F multiplied by D, so OFKD. Total revenues are greater, OGLD, so profits are positive. 5. (Figure: A Perfectly Competitive Firm in the Short Run) The price at which profits are zero is: A) G. B) F . C) E . D) N . C: at a price of E at the profit maximizing quantity, price equals average costs 6. The slope of a(n) _______ curve shows the rate at which two goods can be exchanged _______ the consumer's ________. A) marginal utility; which increases; marginal utility B) indifference; without affecting; total utility C) iso-utility; without affecting; budget D) indifference; without affecting; budget B: The indifference curve has nothing to do with the budget, B is correct, and A makes no sense to me. 7. Which of the following is not true for indifference curves of ordinary goods?
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2010FinalFall08Draft - Principles of Microeconomics...

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