Econ 001: Final Exam
(Dr. Stein) Answer Key
May 4th, 2012
This is a 120-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.
Calculators are not allowed on this exam.
The Exam has 3 parts. You will need 3 blue books. One for each part.
Multiple Choice Questions (3 points each/42 points total).
Please write your answers in blue book 1.
Three months prior to Madonna’s spectacular Superbowl halftime performance, she
contemplated singing either “Material Girl” or “Just like a Prayer.” If Madonna sings
“Material Girl,” she would need to pay $8,000 for a bejeweled bodysuit. For “Like a
prayer” the costume would cost only $3, 000. Additionally, Madonna gets $15,000 of
benefit from singing “Material Girl” and $5,000 in satisfaction from “Like a Prayer”.
Prior to purchasing either costume, what is the opportunity cost of singing “Material
Which of the following situations best illustrates the concept of consumer surplus?
a. a manufacturer reduces the price of an item from $ 2.50 to $ 2.30 in the hope of
being able to sell more units.
b. a consumer who was not willing to buy a car at $ 100,995, but was prepared to
buy it at $ 99,995.
c. a British tourist who was willing to pay $ 5.00 for a burger, but was only charged
$ 4.00 instead.
d. a market reaches a condition whereby the demand for a product is greater than the
producers' ability to supply it.