1Final ExamPrinciples of Microeconomics – Econ1014Spring 2013Blue VersionStep 1. Write your name and student ID in the space below.Name:Student ID:Step 2. Do not open the exam until you are told to begin.Step 3. When told to begin, check that you have 70 examquestions.Step 4. Only pencils, erasers and ruler may be used on thisexam. Any other devices used or any talking during the examwill be considered cheating.Step 5. Fill in your scantron form as you are answeringquestions. No answers will be accepted unless they havebeen filled into the scantron form prior to time being calledat the end of the exam.Step 6. Turn in your scantron form and cover page whenfinished. Keep the rest of your exam copy for review.
3Figures Needed for Exam Questions Figure A: Cost Benefit Analysis Suppose the following table provides the information you used to make a decision about the purchase of a new hybrid vehicle. Expected MB Actual MB Expected MC Actual MC $14,000 trade in for old car $10,000 trade in for old car $26,000 price of car $26,000 price of car $6,000 happiness from helping the environment $7,000 happiness from helping the environment $0 extra paid for maintenance and repairs $5000 extra paid for maintenance and repairs $3,000 in happiness from prestige of owning hybrid $1000 in happiness from prestige of owning hybrid $3000 gas savings $1000 gas savings Paragraph B: Costs and Revenue Information for a Producer Suppose you decide to open your own accounting business and you are trying to determine your profitability over the past year. You have the following information collected that you are considering. You quit your job at a big accounting firm where you were paid $50,000 per year in order to start this business. To help you get started, you took out a loan from the bank in the amount of $20,000 at a 10% annual rate of interest and you took $50,000 of your own money out of the bank where it was earning a 10% annual rate of interest. You hired a receptionist and two part-time book-keepers to help with your business; you total payments to the three of them together were $70,000 for the year. You paid $30,000 for computer equipment which the IRS estimates depreciates at a rate of 20% per year. You paid $24,000 for utilities, $12,000 for supplies and $25,000 for taxes for the year. These are the total of your business expenses. Finally, you estimate that you made revenue of $150,000 for the year. Figure C: Picture of Market 01234567891011120102030405060708090100SupplyDemandQuantityP($)
4Figure D: Picture of Market Figure E: Production Possibilities and Trade0102030405060708090100110120130140150160170180190200020406080100120140160180200SingaporeMalaysia Boats Boats Rice (millions of pounds) Rice (millions of pounds) 250 100 250 125 SupplyDemandQuantityP($)
5Figure F: Production Costs in Perfection Competition02468101214161820020406080100120140160180200220240260280300MCAVCATC$Quantity
6Figure G: Production in Monopoly0102030405060708090100110120130140150160170180190200020406080100120140160180200SupplyDemandQuantityP($)ATC