ECON 2010 FINAL - Name Date Econ 2010 sec 50 Final Version...

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Version 1 Page 1 Name: __________________________ Date: _____________ Econ 2010 sec. 50 Final: Version A Fall 2011 1. Consider the statement, "The slope of an indifference curve (budget line) for goods A and B indicates the rate at which the individual (the market) substitutes good A for Good B." This statement is A) not enough information to determine whether it is true or false. B) true C) false 2. In lecture, we looked at an example where Professor Morey's daughter, Fred, was paid $1 per mile skied. Fred's only cost was the value of her time, $3 an hour. In order to maximize profit, Fred will ski up the point where it cost her $3 to ski her last mile. A) True B) False 3. Assume that Brooke is maximizing her utility and consuming a positive amount of Bud Lite. Then the market price of Bud Lite decreases, Brooke's downward-sloping demand curve for the Bud Lite remaining the same, her consumer's surplus associated with Bud Lite increases. A) No B) Maybe C) Yes 4. An individual is more likely to free ride when a good is:
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Version 1 Page 2 Use the following to answer question 5: Figure: Three Firms 5. (Figure: Three Firms) Three firms in a small city are responsible for emitting pollution, and the marginal benefit of the individual polluters is shown in the figure. If the city imposes a tax of $400 per ton of pollution, Firm B will produce ________ while Firm A will produce ________ of mercury and Firm C will produce ________ A) 600 tons; 400 tons; 900 tons B) 300 tons; 500 tons; zero tons 6. A move to Commerce City from Boulder would make you worse off. Your WTA the move is bounded from above by your income/wealth. A) True B) False 7. Let d denote Diet Cokes and c chocolate bars. At my current consumption level my MRS dc =3. So, my wtp for an additional Diet Coke is 3 chocolate bars. 8. Marginal social cost of an action is the cost of the action that the producer of the action does not pay A) True B) False
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Version 1 Page 3 9. In a society that consists of one individual, which statement best describes the allocation of resources that is socially optimal 10. George steals your wallet, making himself better off, and you worse off. Before the theft took place the allocation of resources was necessarily efficient. A) True B) False
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