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Unformatted text preview: Econ 001: Midterm 2 (Dr. Spiegel) November 15, 2010 Instructions: ! This is a 60-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. The Midterm has 2 parts. Part 1 consists of 4 multiple-choice questions. Please write you answers in blue book 1. Part 2 consists of 4 short answer questions. Please place your answers in three blue books according to the following instructions. Blue Book 1: MC questions and short answer question 1 Blue Book 2: Short answer question 2 Blue Book 3: Short answer questions 3 and 4 Part I: Multiple Choice Questions 4 points each/16 points total): 1. A company selling baseball caps has the following MR and MC: q 1 2 3 4 5 MR 10 9 8 7 6 MC 2 3 4 7 8 Using this information, we may assume the company: I. produces in a perfectly competitive market II. produces with a technology exhibiting diminishing marginal productivity a. only I b. only II c. Both I and II d. Neither I nor II 2. Using the information from the question above, how many baseball caps will this firm sell? a. 3 b. 4 c. 5 d. The answer depends on the price 3. When average variable cost is increasing, which of the following must be true a. average total cost must be increasing b. average fixed cost must be increasing c. marginal cost must be above the average variable cost d. all of the above e. a and c f. a and b 4. Which of the following distinguishes the monopolistic competition model from...
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