final_exam_blue_key - Final Exam Principles of...

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1 Final Exam Principles of Microeconomics – Econ1014 Spring 2013 Blue Version Step 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 exam questions. Step 4. Only pencils, erasers and ruler may be used on this exam. Any other devices used or any talking during the exam will be considered cheating. Step 5. Fill in your scantron form as you are answering questions. No answers will be accepted unless they have been filled into the scantron form prior to time being called at the end of the exam. Step 6. Turn in your scantron form and cover page when finished. Keep the rest of your exam copy for review.
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3 Figures 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 $150,000 for the year. Figure C: Picture of Market 0 1 2 3 4 5 6 7 8 9 10 11 12 0 10 20 30 40 50 60 70 80 90 100 Supply Demand Quantity P($)
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4 Figure D: Picture of Market Figure E: Production Possibilities and Trade 0 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 160 170 180 190 200 0 20 40 60 80 100 120 140 160 180 200 Singapore Malaysia Boats Boats Rice (millions of pounds) Rice (millions of pounds) 250 100 250 125 Supply Demand Quantity P($)
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5 Figure F: Production Costs in Perfection Competition 0 2 4 6 8 10 12 14 16 18 20 0 20 40 60 80 100 120 140 160 180 200 220 240 260 280 300 MC AVC ATC $ Quantity
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6 Figure G: Production in Monopoly 0 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 160 170 180 190 200 0 20 40 60 80 100 120 140 160 180 200 Supply Demand Quantity P($) ATC
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