20071 - THE UNIVERSITY OF NEW SOUTH WALES SCHOOL OF...

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Unformatted text preview: THE UNIVERSITY OF NEW SOUTH WALES SCHOOL OF ECONOMICS SESSION 1,2007 ECONllOl MICROECONOMICS I FINAL EXAMINATION TIME ALLOWED- 2 HOURS THIS PAPER IS WORTH 60% OF THE TOTAL SUBJECT MARK This examination paper consists of two parts - Part A and Part B Part A consists of 20 multiple choice questions each worth one (1) mark. Answer all the questions in Part A on the answer sheet provided, using pencil only: (a) Print your student number, name and initials in the space provided and mark the appropriate boxes below your student number, name and initials. (b) For each question, mark the appropriate response (a), (b), (c), or (d). There is only one correct response to each question in Part A. Part B consists of four (4) essay-type questions, each worth TWENTY (20) marks. Answer only TWO (2) questions from Part B. ANSWER EACH PART B QUESTION IN A SEPARATE EXAMINATION BOOKLET Answers to questions in Part B must be written in ink. Pencil may be used in answers to Part B for drawing, sketching or graphical work only. This question paper may be retained by the candidate PART A This section is worth 20 marks Mark your answer on Answer Sheet provided Question 1 In a perfectly competitive market, the demand curve faced by a typical firm: (a) is significantly more elastic for price increases than for price decreases (b) is perfectly elastic at the current market price (c) is perfectly inelastic at the current market price (d) is of unitary elasticity (11 = 1) at the current market price Question 2 A profit maximising firm, operating in a perfectly competitive market, will make a loss but continue to produce in the short run when: (a) price is below average total cost but above average variable cost (b) price is below average variable cost but above average fixed cost (c) price is below average variable cost but above marginal cost (d) price is below marginal cost but above average total cost Question 3 Which of the following statements is true? (a) A profit maximising monopolist will always set price and output at a level where demand is price elastic. (b) A profit maximising monopolist always produces where Average Revenue equals Average Cost (c) A profit maximising monopolist will, in long run equilibrium, always use a scale of plant that minimises long run Average Costs. (d) A profit maximising monopolist will always produce where marginal cost is greater than price. 2 Question 4 Which of the following statements about the Monopolistic Competition market model is true? (a) The typical firm tends to experience diseconomies of scale (b) In the long run, surviving firms make zero economic profit. (c) The market is characterised by a small number of rival firms each selling a slightly differentiated product (d) The demand for each firm's product is infinitely elastic....
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This note was uploaded on 12/31/2011 for the course ECON 1101 taught by Professor Julia during the Three '08 term at University of New South Wales.

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20071 - THE UNIVERSITY OF NEW SOUTH WALES SCHOOL OF...

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