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Unformatted text preview: Econ 100B (Grossman)Winter 2011 Final ExamVersion C March 15, 2011 Instructions: This is a closed-book, closed-notes exam. No calculators or electronic devices are allowed. Please turn off and put away all phones and other electronic devices. There are 14 multiple-choice questions and two free-response questions. Answer as many as you can in the time allowed. I do not expect everyone to be able to answer all questions. If you get stuck on something, I suggest moving on and coming back later when/if you have time. If you have a question, please raise your hand. Good luck! Multiple choice 29 out of 50 pts. (14 qns., 2 pts. each + 1) Answer these questions on your Scantron. Your score will only be based on the marks on your Scantron. You will not receive any credit for anything written on your exam paper. You will receive 1 extra point for correctly writing your TAs name on your Scantron, and correctly bubbling in your name, perm number, and version (A,B,C, or D) in the appropriate places on your Scantron. Exams without the version marked will be assigned the average score for all four versions. 1. In the competitive belt industry, the demand is q = 10- p and the supply is q = p- 2. What is the deadweight loss if the government imposes a tax of 4 per belt? (a) 4 (b) 2 (c) 6 (d) 8 2. Suppose Eli faces the following inverse demand function, p = 48- 8 q . At what price is the price elasticity of demand =- 2? (a) 36 (b) 32 (c) 2 (d) 1.5 3. Nefi has $16 and preferences given by u ( w ) = w . Which of the following options maximizes her expected utility? (a) Pay all her money ($16) for a lottery ticket that has a 50-50 chance of winning $100 (b) Pay $7 for a lottery ticket that has a 50-50 chance of winning an additional $72 (c) Get a free lottery ticket that has a 1 in 4 chance of winning an additional $48 (d) Do nothing 4. BananaHammock has a monopoly on bananas on Paradise Island and faces a marginal cost of MC = 1. Wilson has an inverse demand for bananas given by P = 5- . 5 q and is the only consumer on the island. What price should BananaHammock charge per banana to maximize profits? (a) 3 (b) 7/2 (c) 2 (d) 4 1 5. (continued from previous question) BananaHammock realizes it can increase profits by selling bananas by the bunch instead of individually. Assuming it can create bunches of any size, how many bananas should be in each bunch and what are total profits?...
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