F09Mid2V1 - Name: _ Second Midterm Examination Economics...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
Version 1 Page 1 Name: __________________________ Second Midterm Examination Economics 101 November 11, 2009 This exam has 33 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. When Treasury Secretary Geithner warns of moral hazard in the financial industry, he means that allowing banks to get big ensures that the government will not have to bail them out. 2. In an industry that exhibits external diseconomies of scale, a decrease in demand causes the long-run equilibrium price to increase. 3. When water is inexpensive, consumers' total benefit from its consumption will be low. 4. Even in the case of constantly diminishing marginal product, the short-run average total cost curve is U-shaped. 5. In an industry that exhibits external economies of scale, the granting of a subsidy results in a decrease in the long-run equilibrium price the producer receives.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Version 1 Page 2 6. If demand for a good is always price inelastic, prohibiting its sale results in higher total revenue for sellers. 7. If we refer to “too many cooks in the kitchen” affecting the marginal product of labor, we mean that hiring additional workers causes the marginal product of labor curve to shift down. 8. If a competitive firm's employees take a wage cut, its break-even and shut-down prices will be lower and it will optimally produce more. 9. A binding quota causes a deadweight loss. 10. A binding price ceiling must be lower than the equilibrium price in the market. 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. Chipotle produces burritos and sells them on State Street. It has a fixed cost of $10,000. The marginal cost of producing the first burrito is $5. Marginal costs fall for the first 1000 burritos produced, but then rise as the burrito assembly line nears capacity. Chipotle’s average total cost could be at a minimum at a quantity of __. A) 700 burritos B) 0 burritos C) 8000 burritos D) 500 burritos E) 1000 burritos
Background image of page 2
Version 1 Page 3 12. Torrey maximizes her utility, spending all of her income on both shoes and booze. Which of the following statements correctly describes her utility maximizing response to an increase in the price of booze? A) If booze is an inferior good for her, the substitution effect of the price change decreases her consumption of booze and the income effect increases her consumption of booze. B) If booze is an inferior good for her, the substitution effect of the price change increases her consumption of booze and the income effect decreases her consumption of booze.
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 14

F09Mid2V1 - Name: _ Second Midterm Examination Economics...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online