Practice_final_A

Practice_final_A - page 1 of 11 Economics 2 Fall 2011 your...

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page 1 of 11 Economics 2 your name _______________________________ Fall 2011 your student i.d. __________________________ PRACTICE FINAL EXAM A DIRECTIONS: No calculators, books, or notes of any kind are allowed. All papers and notebooks must remain closed and on the floor at all times throughout the exam, and students are not allowed to leave the examination room until finished. Please do not turn in your exam before 4:00 p.m. Answer all questions in the space provided with the exam. Two hundred points are possible on this exam. HINTS: Feel free to use the following formulas if you find them useful. Area of a triangle = (1/2) (base) (height) Area of a trapezoid = (1/2)(base1 + base2)(height) MULTIPLE CHOICE—circle the correct answer (4 points each, 168 points total) 1.) In a competitive market with no externalities, how would you compare the effects of a tax imposed on producers of the good with a subsidy provided to producers of the good? a.) the tax would increase consumer surplus and the subsidy would increase consumer surplus b.) the tax would decrease consumer surplus and the subsidy would decrease consumer surplus c.) the tax would decrease consumer surplus and the subsidy would increase consumer surplus d.) the tax would increase consumer surplus and the subsidy would decrease consumer surplus 2.) If the elasticity of demand is less than one, a monopolist should a.) increase production and increase price b.) decrease production and decrease price c.) decrease production and increase price d.) increase production and decrease price 3.) The “hurdle method” is a way for a firm to a.) prevent competitors from entering the market b.) practice a form of price discrimination c.) make technological breakthroughs d.) develop a natural monopoly 4.) If a group of originally competitive firms is bought up by a single owner who then behaves like a monopolist, a.) producer surplus will go up and consumer surplus will go up b.) producer surplus will go down and consumer surplus will go down c.) producer surplus will go down and consumer surplus will go up d.) producer surplus will go up and consumer surplus will go down 5.) Which of the following is true of a Nash equilibrium? a.) there is no possible outcome in which both players would be better off b.) each players’ choice is optimal given the other players’ choices c.) all players follow the same strategy d.) players follow a tit-for-tat strategy
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page 2 of 11 6.) In experiments in which the Ultimatum Bargaining Game is studied with real human players, a.) a majority of times the outcome is the Nash equilibrium b.) a majority of times the players end up in a Prisoner’s Dilemma c.) a majority of times the players do not let emotions or notions of fairness affect their efforts to get the most money out of the experiment d.) none of the above 7.) If there are external costs, then in a competitive equilibrium, a.) too much of the good is produced and consumers pay too high a price b.) too little of the good is produced and consumer pays too low a price c.) too little of the good is produced and consumers pay too high a price d.) too much of the good is produced and consumers pay too low a price
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Practice_final_A - page 1 of 11 Economics 2 Fall 2011 your...

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