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FinalS2011aAnswersWeb-1 - Econ 001 Final Exam(Dr Stein...

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Econ 001: Final Exam (Dr. Stein) Answer Key May 10th, 2011 Instructions: This is a 120-minute examination. Write all answers in the blue books provided. Show all work. Use diagrams where appropriate and label all diagrams carefully. Write your name and your Recitation Instructor's name in every blue book that you use. This exam is given under the rules of Penn's Honor system. All blue books, blank or filled, must be handed in at the end of this exam. No blue books may be taken from the room. Calculators are not allowed on this exam. The Exam has 3 parts. You will need 3 blue books. One for each part. Part I: Multiple Choice Questions (3 points each/33 points total). Please write your answers in blue book 1. 1. Currently the unemployment rate is close to 10%. Given this information, which of the following will be true? a. If unemployment decreases the economy will be able to produce outside the PPF. b. If unemployment decreases the economy will move to a different point on the PPF c. Both statements are true. d. Neither statement is true. 2. We are given that the price of corn is $4 a bushel and that a million bushels are exchanged in the market. We also know that the supply & demand curves are straight lines. i. If we calculate total surplus we will find that the more inelastic the demand is, the larger is total surplus. ii. If we calculate producer surplus we will find that the more inelastic the supply is the smaller is producer surplus. Which of the above statements is true?
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