Econ_198_Spr_05_Exam__4 - Introduction to Microeconomics...

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Introduction to Microeconomics Allen R. Sanderson Economics 19800 Spring 2005 FOURTH HOUR (AKA FINAL) EXAMINATION Name (Please Print): ______________________________________ [40 Points Possible] Part I. Multiple Choice. Circle letter corresponding to your answer. One point each; 14 points total. 1. In The Fatal Equilibrium, the example of pricing in Filene’s basement illustrates the principle of: a. price searching behavior on the part of an oligopolist. b. diminishing returns to scale. c. comparative advantage. d. consumer surplus. e. positive externalities of consumption. 2. Which of the following statements about income inequality or poverty in the U.S. is correct? a. Ignoring taxes and transfers, the poorest 1/5 of the population receives about 2% of total income. b. About 20 percent of families fall below the generally accepted notion of a poverty line. c. Among developed countries, we appear to have one of the largest levels of inequality. d. The degree of income or wealth inequality, while large, has not changed much in 50 years. e. Inequality has increased here in recent decades but has decreased in most other countries. 3. Most of our current environmental problems exist because of: a. the short-sightedness effect and ignorance. b. the inevitability of the Coase theorem. c. the finite nature of, and increased use of, our natural resources. d. rising world income levels coupled with greed on the part of individuals and business firms. e. poorly defined (and the difficulty of defining and enforcing) property rights. 4. By an “equitable distribution of income” we mean one that: a. is efficient. b. is fair. c. leaves everyone with the same after-tax income, at least over the entire life cycle. . d. pushes out the PPF and maximizes economic growth. e. requires the rich to pay more in taxes than the poor. 5. On average, U.S. households derive the majority of their current incomes from: a. wages and salaries. b. interest earnings, rental income and profits. c.
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Econ_198_Spr_05_Exam__4 - Introduction to Microeconomics...

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