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Unformatted text preview: page 1 of 12 Economics 2 your name _______________________________ Winter 2011 your student i.d. __________________________ PRACTICE FINAL EXAM B DIRECTIONS: No calculators, books, or notes of any kind are allowed. All papers and notebooks must remain closed and on the floor at all times throughout the exam, and students are not allowed to leave the examination room until finished. Please do not turn in your exam before 9:00 a.m. Answer all questions in the space provided with the exam. Two hundred points are possible on this exam. HINTS: Feel free to use the following formula if you find it useful. Area of a triangle = (1/2) (base) (height) Area of a trapezoid = (1/2)(base1 + base2)(height) MULTIPLE CHOICEcircle the correct answer (4 points each, 156 points total) 1.) If the supply curve for a particular good is perfectly elastic, then if a $1 tax per unit of the good sold is imposed on the sellers a.) the price paid by buyers will increase by more than $1 b.) the price paid by buyers will increase by exactly $1 c.) the price paid by buyers will increase, but by less than $1 d.) the price paid by buyers will not change at all 2.) If a firm is operating at a point where marginal revenue is less than marginal cost, then a.) the firm could make more profit by increasing production b.) the firm could make more profit by decreasing production c.) the firm is making as much profit as it can d.) the firm is making a loss 3.) Which of the following is worst from the point of view of economic efficiency? a.) perfect competition b.) a monopolist who charges the same price to all customers c.) a monopolist who charges each customer the maximal amount that customer is willing to pay d.) as a general rule, the above are all equally efficient 4.) Which of the following is an accurate characterization of monopolistic competition? a.) firms do not compete with each other in terms of the price they charge b .) firms do not have any control over the price they charge because they have so many competitors c.) firms do not compete with each other in terms of the quality of the product they produce d.) new firms are able to enter the market 5.) Which of the following government policies or institutions would you describe as being most effective at preventing firms from exercising monopoly power? a.) patents b.) copyrights c.) exclusive government franchises d.) Federal Trade Commission page 2 of 12 Questions 6 and 7 refer to an advertising game between Alices company and Bonnies company. Alice advertises Alice doesnt advertise Bonnie advertises Alice gets 20 Alice gets 10 Bonnie gets 20 Bonnie gets 50 Alice gets 40 Alice gets 30 Bonnie doesnt advertise Bonnie gets 30 Bonnie gets 40 6.) Which of the following statements is correct?...
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