ExamView+-+fall2009exam2B

ExamView+-+fall2009exam2B - Name: _ Class: _ Date: _...

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Name: ________________________ Class: ___________________ Date: __________ ID: B 1 Introduction to Microeconomics - Exam 2 Multiple Choice Identify the choice that best completes the statement or answers the question. ____ 1. The fundamental reason that marginal cost eventually rises as output increases is because of a. rising average fixed cost. b. diminishing marginal product. c. economies of scale. d. diseconomies of scale. ____ 2. For a firm, the production function represents the relationship between a. quantity of inputs and quantity of output. b. implicit costs and explicit costs. c. quantity of inputs and total cost. d. quantity of output and total cost. ____ 3. Which of the following is true of markets characterized by positive externalities? a. Social value exceeds private value, and market quantity is less than the socially optimal quantity. b. Social value seldom exceeds private value; therefore, social quantity is less than private quantity. c. Social value is less than private value, and market quantity exceeds the socially optimal quantity. d. Social value exceeds private value, and market quantity exceeds the socially optimal quantity. Figure 7-7 ____ 4. Refer to Figure 7-7. Which area represents producer surplus when the price is P2? a. BCG b. ABGD c. ACH d. AHGB
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Name: ________________________ ID: B 2 ____ 5. Which of the following statements is correct? a. The marginal tax rate measures total taxes paid divided by total income. b. The average tax rate gauges the sacrifice made by a taxpayer, whereas the marginal tax rate gauges the distortion of taxes on consumer decisions. c. The average tax rate measures how much the tax system discourages people from working. d. The marginal tax rate gauges the sacrifice made by a taxpayer, whereas the average tax rate gauges the distortion of taxes on consumer decisions. Table 11-2 Consider a small town with only three families, the Jones family, the Harris family, and the Wong family. The town does not currently have any streetlights so it is very dark at night. The three families are considering putting in streetlights on Main Street and are trying to determine how many lights to install. The table below shows each family’s willingness to pay for each streetlight. Number of Streetlights The Jones Family The Harris Family The Wong Family 1 $180 $250 $220 2 140 200 210 3 90 140 180 4 30 70 130 5 0 35 60 6 0 0 20 ____ 6. Refer to Table 11-2. Suppose the cost to install each streetlight is $400. How many streetlights should the town install to maximize total surplus from the streetlights? a. 3 streetlights b. 1 streetlight c. 2 streetlights d. 4 streetlights ____ 7. Coffee and tea are substitutes. Bad weather that sharply reduces the coffee bean harvest would a. increase consumer surplus in the market for coffee and decrease producer surplus in the market for tea.
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This note was uploaded on 11/16/2011 for the course 220 102 taught by Professor Perry during the Fall '09 term at Rutgers.

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ExamView+-+fall2009exam2B - Name: _ Class: _ Date: _...

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