Econ_198_Spr_06_Exam__3 - Introduction to Microeconomics...

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Allen R. Sanderson Economics 19800 Spring 2006 THIRD 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. “Nonrival” and “nonexcludable” are terms most closely associated with: a. rational ignorance. b. negative or positive externalities. c. risk and the market for insurance. d. equity concerns. e. free-rider issues. 2. I don’t actually know where either of my two Senators, Durbin or Obama, stands on the question of amnesty for illegal aliens already living in the U.S. This would be a good example of: a. public bads. b. moral hazard. c. rational ignorance. d. minimum differentiation. e. market failure. 3. Under rate-of-return regulation, a regulated firm has an incentive to: a. inflate its average total costs. b. hide or disguise losses from bad investments. c. reduce its output. d. cheat on its rivals. e. use an efficient amount of capital. 4. Reducing deadweight loss is a goal of regulations according to: a. the capture theory of regulation. b. the social interest theory of regulation. c. the median voter theory of regulation. d. the natural monopoly theory of regulation. e. the public choice theory of regulation. 5. According to economic models of public choice, the objective of politicians is to: a. promote the pubic and social interest, including reducing or eliminating deadweight losses. b. deal effectively with externalities and public goods issues. c. pay close attention to equity concerns. d. get elected and stay in office. e. counterbalance the influence of bureaucrats and lobbyists. 6. A Chicago Tribune headline from January 26, 2006, read: “U of C kids’ hospital gets $42 million.” The story went on to say that Land’s End founder Gary Comer and his wife will give “half the funding this year, followed by $2 million a year for the next 10 years.” Which section of our course/reading dealt with the underlying economic issue or principle inherent in this story? a. derived demand b. social interest theory c. present value d. information economics – risk, uncertainty and insurance. e.
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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_Spr_06_Exam__3 - Introduction to Microeconomics...

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