FINALS08

FINALS08 - Name Test Form A Economics 1 Final Exam June 9,...

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Unformatted text preview: Name Test Form A Economics 1 Final Exam June 9, 2008 True-False Questions: Fill in Bubble A for True, Bubble B for False. 1. If the production and sale of a good imposes external costs on members of a community, the total profits of community members will be increased if trade in the good is banned. 2. If the production of a good causes a positive externality, a competitive equilibrium in the market for that good may be inefficient. 3. If the cost of producing one more unit is lower than the price at which a monopolist is cur- rently selling its output, then the monopolist will increase its profits by selling one more unit. 4. The sum of demanders profits and suppliers profits is lower under monopoly than under competition. 5. If Person A has absolute advantage over Person B in the production of Good X, then Person A must also have comparative advantage over Person B in the production of Good X. 6. Consumers surplus is the difference between the number of units of a good demanded and the number of units supplied. 7. If the demand curve slopes down and the supply curve slopes up, then when the demand curve shifts, the equilibrium price and quantity move in the same direction. 8. Competitive equilibrium theory predicts that the number of transactions and the amount of profits for buyers and for sellers would be the same if a sales tax of $20 per unit were collected from buyers as they would be if a sales tax of $20 per unit were collected from sellers. 9. A profit-maximizing firm will always want to hire the number of workers that gives it the highest average profit per worker. Economics 1 2 10. In a short-run equilibrium, all firms make a positive profit. Multiple Choice Questions 11. Side Hill Lie Golf Course gets regular play on weekdays (Monday through Friday) from a group of retired senior citizens. They only play on weekdays and never on the weekend (Saturday and Sunday). On the weekend, Side Hill gets play from residents of the community who have full-time jobs during the week. They only play on the Saturday and Sunday and never during the rest of the week. If Side Hill charges $15 a round, 100 golfers will demand to play on an average weekday, and 250 golfers will demand to play on an average Saturday or Sunday. If it charges $20 per round, 80 will demand to play on an average weekday, and 150 on an average Saturday or Sunday. If it charges $25 a round, 70 will demand to play on an average weekday, and 100 on an average Saturday or Sunday. Side Hill incurs a cost of $5 per golfer per day. Suppose Side Hill must charge the same price on the weekend as during the week. If Side Hill wishes to maximize its profits, what price should it charge? (Remember that a week almost always has 5 weekdays, one Saturday, and one Sunday.) (a) $15 (b) $20 (c) $25 12. Suppose that the demand for and cost of golf at Side Hill Lie Golf Course is exactly as depicted in the previous question. But, now suppose that the golf course can charge a price on the weekend (Saturday and Sunday) that is different that the price it charges during the...
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FINALS08 - Name Test Form A Economics 1 Final Exam June 9,...

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