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econ 489 problems1_fall11

econ 489 problems1_fall11 - ECON 489/689 Sample Questions...

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ECON 489/689 Sample Questions for First Midterm True/False/Uncertain . For each question, answer “True” or “False” or “Uncertain” and explain your answer. Use graphs if necessary. On the midterms, if you do not provide an explanation, you will not receive any credit. (1) If a regulator sets a price cap between the monopoly price and perfectly competitive price, total welfare in a market will increase. (2) Natural gas price controls during the late 1970s hurt producers at the expense of consumers, but did improve economic efficiency. (3) The California electricity market from 1998-2000 was perfectly competitive. The skyrocketing prices in 2000 resulted from natural forces of supply and demand. Natural Gas Deregulation . In the 1960s, the federal government regulated the prices of natural gas wellheads. The regulated prices depended upon whether the well was discovered before January 1, 1961 (“old gas”) or after January 1, 1961 (“new gas”).
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