Econ_198_Aut_07_Exam_2 - Introduction to Microeconomics...

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1 Introduction to Microeconomics Allen R. Sanderson Economics 19800 Autumn 2007 SECOND HOUR EXAMINATION Name (Please Print): ______________________________________ [42 Points Possible] Part I. Multiple Choice. Circle letter corresponding to your answer. One point each; 21 points total. 1. How and why do firms practice price discrimination? a. by charging lower prices to less well-heeled buyers they can create more equity in the society b. by charging different prices for different goods to the same buyers to expand their range of products and services c. by cutting prices between competitors so as to eliminate competition or increase market share d. by refusing to sell to certain segments of the market in order to keep prices high e. by segmenting the market to capture consumer surplus and increase profits 2. Deadweight loss is largely the result of: a. the rich paying less than the poor for a product. b. consumers being charged different prices for the same product. c. diseconomies of scale. d. wasteful advertising expenditures and diseconomies of scale. e. price exceeding marginal cost. 3. Two or more firms that make agreements regarding price and/or output levels to maximize collective profits could be considered: a. a Nash equilibrium; b. a cartel; c. an oligopoly; d. resale price maintenance; e. a contestable market. 4. The merger of two of the largest U.S. beer companies, Miller (with a market share of 17.8%) and Coors (a 10.9% share) could be for all of the following reasons except : a. diseconomies of scale. b. increasing market share for more power in the marketplace. c. efficiency. d. economies of scope. e. To deal more effectively in a game-theoretic sense with Anheuser-Busch, the industry leader. 5. The clearest example of price discrimination at the University of Chicago would be: a. how financial aid is awarded. b. admission decisions that are largely subjective. . c. the hours that Regenstein, the Bursar’s and Registrar’s offices and Ratner/Crown are open. d. dorm and room assignments. e. the differential pricing of dinners in BJ vs. Pierce vs. Bartlett cafeterias. 6. In several Summer ‘07 articles on the loss of trees in urban areas and the impact on fighting pollution, one account reported that cities are replacing large old trees, which require more maintenance, with smaller trees. But one spokesperson commented: “That’s bad for air quality. A big tree does 60-70 times the pollution removal of a small tree.” In economic terms, a. big trees are not really fixed (or sunk) costs. b.
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This test prep was uploaded on 04/07/2008 for the course ECON 198 taught by Professor Sanderson during the Spring '08 term at UChicago.

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Econ_198_Aut_07_Exam_2 - Introduction to Microeconomics...

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