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211finalfall04 answers

211finalfall04 answers - Economics 211 Final Examination...

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Economics 211 Final Examination Fall 2004 (3 hours, 200 points) Circle the name of your instructor: Leroux Soligo Nesbitt Biyikli Eris Gilbert NAME: __________________________________________________________________ PLEDGE:______________________________________________________________________ _________________________________________________________________________ _____________________________________________________ Multiple choice ( 3 points each, 30 points total) 1. Which of the following characteristics is NOT required to maintain a cartel? a) Barriers to entry. b) Government support. c) Enough market share to be able to exercise market power. d) The ability to detect cheating. 2. Consider a production process which takes labor and capital as inputs. If the production function is such that if one doubles the amount of labor (holding the amount of capital fixed) one doubles the amount of output, the production function exhibits: a) constant elasticity. b) constant returns to scale . c) constant average product of labor. d) increasing marginal returns to capital. 1
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Which statement characterizes an inferior good? a) Its demand curve slopes downward. b) Marginal utility falls as more of it is consumed. c) Marginal utility for it is always negative. d) Demand for it decreases when income rises. 4. The equilibrium output of a free competitive market: a) falls short of the socially optimum level if negative externalities are present. b) equates marginal social benefit with marginal private cost if there are no externalities present. c) can be made socially optimum with the help of a subsidy to the producer when negative externalities are present. d) results in a deviation of marginal social costs (?????) from marginal private costs when a tax is imposed that completely corrects for a negative externality. 5. In a famous antitrust case, the government charged the DuPont Company with attempting to monopolize the cellophane industry. The company argued that while it was the major producer of cellophane, it was competing in the broader market of "flexible packaging," which was a very competitive industry. Waxed paper, glassine, and aluminum foil all had sizable shares of the flexible packaging market. In determining if DuPont was, in fact, competing in the flexible wrap industry, one would be interested in determining: a) evidence of collusion among flexible wrap producers. b) the per unit cost as a function of output for cellophane. c) the income elasticity of demand for cellophane relative to the other flexible wraps. d) the cross-elasticity of demand between cellophane and other potential flexible wraps. 6. If a firm under imperfect competition could find buyers for 9 units at a price of $5.00 (no excess quantity demanded), and if the marginal revenue due to the tenth unit were $2.00, the highest price at which a firm could find buyers for 10 units must be a) $2. b)
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211finalfall04 answers - Economics 211 Final Examination...

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