Mid3W10 - Name: __________________________ Third Midterm...

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Unformatted text preview: Name: __________________________ Third Midterm Examination Economics 101 April 20, 2010 This exam has 34 questions. Unless a question explicitly says otherwise, assume that all demand curves slope downward and all supply curves slope upward, and there are no externalities. True/False. Mark box A for True and box B for False. Each correct answer adds 2 points to your score. Each blank answer gives you 1 point. 1. In a two-good, two-country model, a country has an absolute advantage in the production of the good for which it has the lowest opportunity cost compared to the other country. 2. The supply of labor is given by workers' marginal revenue products at each level of employment. 3. The Cournot model predicts that each firm in a duopoly undercuts the price of the other, causing the equilibrium price to be competitive. 4. In a two-good, two-country model, specialization of production according to comparative advantage can result in greater consumption in both countries. 5. Demand for a particular type of labor increases when the prices of the goods produced by that labor increase. Version 1 Page 1 6. When the demand for a monopolist's product is price elastic, the monopolist's marginal revenue is greater than zero. 7. If the US has a quota on imports of sugar, candy producers (who use sugar in the production of candy) benefit from this quota. 8. In a monopolistically competitive market, each firm maximizes its profit based on its strategic demand curve. 9. A price ceiling can be imposed on a monopoly to lower the price of its product while at the same time causing more of the product to be sold. 10. If a movie theater charges a lower price for a student ticket than for non-student tickets, then the number of tickets sold to students will be greater than the number of tickets sold to non-students. Multiple Choice. Mark the box corresponding to the best answer. Each correct answer adds 5 points to your score. Each blank answer gives you 1 point. 11. Suppose that a firm notices its consumers elasticities of demand vary. It therefore increases the price of its product for consumers who always have price inelastic demand, and at the same time decreases the price for consumers who always have price elastic demand. You correctly conclude that: A) Its total revenue increases only if the price change for the price elastic consumers dominates B) Its total revenue does not change C) Its total revenue definitely decreases D) Its total revenue increases only if the price change for the price inelastic consumers dominates E) Its total revenue definitely increases Version 1 Page 2 12. If a monopolist maximizes profit when producing the level of output that minimizes its average total cost, then you correctly conclude: A) Its loss is equal to its fixed cost B) Its fixed and variable costs are equal C) Its loss is equal to its variable cost D) Its profit is positive E) Its profit is equal to zero 13. Consider Albert Haynesworths labor supply curve shown below. Over the range of 13....
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Mid3W10 - Name: __________________________ Third Midterm...

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