Midterm 2 Sample 1 Answers

Midterm 2 Sample 1 Answers - PRINCIPLES OF MICROECONOMICS...

Info icon This preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
PRINCIPLES OF MICROECONOMICS Midterm Exam #2: Sample #1 Answers Duration: 2 Hours Non-programmable calculators only Answer all questions on this test paper INSTRUCTIONS: This examination consists of TWO PARTS for a total of 100 marks Part I 4 analytic/graphical questions for a total of 40% Part II 5 multiple choice questions worth 2 marks each for a total of 10%. Wrong answers will not be deducted from right in grading Part II. All questions are to be answered in the spaces provided in this question paper booklet Do not remove any pages or add any pages. No additional paper is supplied. The blank backs of pages may be used for rough work. Show your work where applicable. YOU MUST USE PEN INSTEAD OF PENCIL TO BE ELIGIBLE FOR REMARKING Print your name and student number clearly on the front of the exam and on any loose pages. Student Name: _______________________________________________________ (Family Name) (Given Name) Student Number : ___________________________________ There are 7 pages to the exam. - 1/7 -
Image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Principles of Microeconomics: Midterm Test #2, Sample #1 Answers Part I Place your answers (and work where necessary) in the space provided. Clearly label all axes, curves, and points. 1. Incidence of a Tax: Equations (10 marks) Suppose that the Demand and Supply equations for Radial Tires, a competitive market, are P = 350 – 0.032Q and P = 90 + 0.048Q (Q is in tires and P is in $s) a) What is competitive equilibrium? (2 marks) 1 mark: Q = 3,250 from something like 350 – 0.032 = 90 + 0.048Q 1 mark: P = 246 from either P = 350 – 0.032*3250 or P = 90 + 0.048*3250 b) Suppose that the government now imposes a pollution tax of $20 per tire to be collected by the sellers. What is the new equilibrium price and quantity after the tax (in the short-run)? (3 marks) 1 mark: recognition that the new supply functions is P = 110 + 0.048Q 1 mark: Q = 3000 from something like 350 – 0.032 = 110 + 0.048Q 1 mark: P = 254 from either P = 350 – 0.032*3000 or P = 110 + 0.048*3000 c) What is the the Sellers’ Price after the tax is paid? (1 mark) 1 mark: Sellers’ Price = 234 from something like 254 – 20 d) What is the Sellers’ Share of the tax per tire? (1 mark) 1 mark: Sellers’ Share = 12 from something like 246 – 234 or 20 – 8 e) Calculate the Buyers’ Share of the tax without solving the equations. Show your work. (1 mark) 1 mark: Buyers Share = 20* 0.036/(0.036 + 0.048) [Must have something like this] f) Calculate the tax revenue of the government from the $20 tax per tire.
Image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern