FALL 2013 Makeup Exam

8/11/2019 FALL 2013 Makeup Exam

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Professor: M. Rush

ECO 2023

FALL 2013

MAKE UP TEST

Read all instructions on this pageThis test is governed by UFs academic honesty code.

This test has 34 questions. IF you are using this test to make up for

missing either Midterm 1 or 2, answer the first 30 questions; if you

using this test to make up for missing the final exam, answer all 34

questions. Choose the best answer for each question.

Unless you are specifically told otherwise, on this test do notassume

that demand or supply is either perfectly elastic or perfectly inelastic.

On the bubble sheet, please enter:

1. Your name and initials

2. Your UF ID number

3. Form code: A

4. Sign your name on the bubble sheet.

Check if the form code and UF ID number you bubbled-in are correct now. Also check tobe sure your name is correctdo it now. I investigated the rumor that the ability to

correctly record these had been mastered by a few students at FSU. This rumor turned

out to be false. But, the rumor that an accounting major and a journalism major did

successfully record these on a test is true. These students have since been bronzed and

are on display outside their respective colleges to serve as an inspiration for all other

accounting and journalism students.

CHECK YOUR FORM CODE AND UF ID NUMBER. IF YOU GET

EITHER OF THESE WRONG, YOUR TEST MIGHT NOT BE

GRADED AND IF IT IS GRADED, YOU WILL LOSE 3 POINTS!

TURN OFF ALL CELL PHONES AND OTHER

COMMUNICATION DEVICESYoumay notuse a cell phone or any other sort of device that allows for communication

as your calculator.


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E C O 2 0 2 3 M A K E U P E X A M F A L L 2 0 1 3

I have become increasingly concerned that some students are at a real disadvantage

because they are unwilling to ask questions during the exam while others ask a lot of

questions. Hence, to level the playing field, I have decided to eliminate allquestions

during the test. I dont like this policy, but it seems the fairest policy.

Do not ask questions of me or the TAs; in the interest of fairness I

have instructed them not to answer any questions during the exam.

You will have one hour (60 minutes) to complete the exam andbubble in all your

answers. When the TAs say that time is up, you musthand in your exam. We will not

give extra time to finish bubbling in the answers, so be sure you are done when the 60

minutes are up. Of course, you may hand in your test at any time before the 60 minutes

are up.

An answer key will be posted on the class web page after 10 PM.

The test scores will be on class web page within a few days.

Once you see the answer key, you might have a question about why one answer

is right and another is wrong. For these questions, email me at

[email protected] Do NOT email the grader about these questions!

After the scores are posted, if you think your posted score is incorrect, then email

the grader at [email protected] If you email me about your test

score, I will not forward the email nor respond to youyouMUSTemail the

grader. You have one week after the curved score is posted to request a grade

check. After a week, the score will not be changed. If the web reportswhat yoububbled in for each question and you ask the grader to check an answer because

you believe you bubbled in something other than what is reported and the

reported answer on the web is correct, you will lose 1 additional question.

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1) In the long run, ____ can make an economic profit and in the long run ____ willincur an economic loss.

A) a monopoly firm; a perfectly competitive firm

B) no firm; no firm

C) a monopolistically competitive firm; a perfectly competitive firm

D) a monopoly firm; no firmE) None of the above are correct.

2) More people are eating high protein diets. Eggs are high in protein. As a result, theprice of an egg will ____ and the quantity will ____.

A) rise; increase

B) rise; decrease

C) fall; increase

D) fall; decrease

3) A firms total revenue definitely increases if the price of the good

A) rises and demand is elastic.

B) rises and demand is inelastic.

C) rises and demand is unit elastic.

D) falls and supply is inelastic.

E) None of the above are correct.

4) If an early frost destroys most of the apple crop, the price of a pound of apples will____ and the quantity of apples will ____.

A) rise; increase

B) rise; decrease

C) fall; increase

D) fall; decrease

5) The price elasticity of demand for corn is 0.5 and the price of a bushel of corn rises10 percent. As a result, the quantity demanded decreases by ____ percent.

A) 20

B) 2

C) 10

D) 5

6) Firms in monopolistic competition always will

A) earn an economic profit.

B) set their price equal to their marginal cost.

C) set their price above their marginal cost.

D) produce at the minimum average total cost.

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13) Suppose firms in a perfectly competitive market are earning an economic profit. Asnew firms enter, the price ____ and the economic profit of each existing firm ____.

A) rises; increases

B) rises; decreases

C) falls; increases

D) falls; does not changeE) falls; decreases

14) The technology used to manufacture computer memory chips advances. As a result,the price of a memory chip ____ and the quantity of memory chips ____.

A) rises; increases

B) rises; decreases

C) falls; increases

D) falls; decreases

15) If a duopoly has a collusive agreement that maximizes their total profits, then eachfirm has

A) no incentive to cheat.B) an incentive to cheat by lowering its price.

C) an incentive to cheat by raising its price.

D) an incentive to cheat by decreasing its output.

16) The price of a burrito at Burrito Brothers is $5. You are willing to pay a maximum of$6 for the burrito and Burrito Brothers is willing to sell the burrito for a minimum of$3. The producer surplus for this burrito is ____.

A) $6

B) $5

C) $3

D) $2

E) $1

17) If the Lorenz curve for income moves farther away from the 45 line, then the

A) distribution of income has become more unequal.

B) distribution of income has become more equal.

C) median household income increased.

D) median household income decreased.

E) mean (average) household income increased.

18) A good or service or a resource is nonexcludable if

A) it is possible to prevent someone from consuming it if they do not pay for it.

B) it is not possible to prevent someone from consuming it even if they do not pay for it.C) one persons consumption decreases the amount available for everyone else.

D) one persons consumption does not decrease the amount available for everyone else.

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19) When marginal revenue equals marginal cost, a monopolistically competitive firmis

A) determining the price it will set.

B) maximizing its revenues.

C) maximizing its profit.

D) establishing its shutdown point.

20) A tax is imposed on the sale of a product. As long as neither the supply nor thedemand is perfectly elastic or inelastic,

A) there will be no change in the price paid by the consumers.

B) the price paid by the consumers will increase by the full amount of the tax.

C) the price paid by the consumers will increase by less than the amount of the tax.

D) the price paid by the consumers will increase by more than the amount of the tax.

21) Automobiles are a normal good and peoples incomes increase. As a result, the priceof an automobile ____ and the quantity ____.

A) rises; increases

B) rises; decreasesC) probably changes but more information is needed to determine if the price rises or falls;

increases

D) falls; decreases

22) Producing a product that has an external cost creates a deadweight loss because

A) more than the efficient amount of output is produced.

B) less than the efficient amount of output is produced.

C) the price firms charge for the good is too high.

D) not enough resources are allocated to the production of the good.

23) Why does the production possibilities frontier bow outward?

A) Unemployment is inevitable.B) Resources are not equally productive in all activities.

C) Technology is slow to change.

D) Labor is scarcer than capital.

24) The price elasticity of demand for cigarettes is 0.5. If government wants to reducethe quantity of cigarettes sold by 10 percent, by how much should it raise the priceof cigarettes?

A) By 10 percent.

B) By 20 percent.

C) By 5 percent.

D) By 50 percent.E) None of the above are correct.

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27) Which of the following is the BEST example of a common resource?

A) A can of Mountain Dew

B) Fish in the ocean

C) A gold mine

D) Cable television

E) National defense

28) Older people use more pharmaceutical drugs and the population is aging.Simultaneously the cost of producing pharmaceutical drugs rises. As a result, theprice of pharmaceutical drugs ____ and the quantity ____.

A) rises; does not change

B) rises; probably changes but more information is needed to determine if the quantityincreases or decreases

C) probably changes but more information is needed to determine if the price rises or falls;increases

D) rises; decreases

E) None of the above answers is correct.

29) The figure above depicts the marginal revenue and costs of a perfectly competitivefirm. The firms profit is maximized when the firm produces

A) 90 units of output.

B) 130 units of output.

C) 170 units of output.

D) 210 units of output.

30) Keeping in mind that you are to email the grader (within 1 week after the test scoresare posted) if you have a question about your test score and you are to email me ifyou have a question about a question, then the director is so fat that

A) he influences the tides.

B) he eats Wheat Thicks.

C) when you walk around him, you can get lost.

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IF YOU ARE MAKING UP EITHER MIDTERM 1 OR MIDTERM 2

STOP NOW; DO NOT ANSWER THE NEXT 4 QUESTIONS; IF YOU

ARE MAKING UP THE FINAL EXAM, YOU MUST ANSWER THE

NEXT 4 QUESTIONS.

31) In the above figure, if a single-price monopolist produces the profit-maximizingquantity and charges the profit-maximizing price, the deadweight loss is equal toarea ____.

A) hbcd.

B) fjem.

C) abc.

D) cdeE) gcem.

32) If the government imposes a tariff on imported bananas, then consumer surplus____, producer surplus ____, and the deadweight loss ____.

A) decreases; increases; decreases

B) increases; increases; decreases

C) increases; decreases; increases

D) decreases; decreases; increases

E) decreases; increases; increases

33) Janes Garage Cleaning is a perfectly competitive firm that currently cleans 80

garages a week. Janes marginal cost is $40, her average total cost is $40, and theprice of cleaning a garage is $50. Jane

A) is maximizing her profit and is earning an economic profit.

B) is not maximizing her profit and is earning an economic profit.

C) is not maximizing her profit and is incurring an economic loss.

D) might be maximizing her profit and is earning an economic profit.

E) is not maximizing her profit and is earning a normal profit anyway.

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34) The technology of producing paper advances while simultaneously the number ofbook publishers buying paper decreases. As a result, the equilibrium price of paper

____ and the equilibrium quantity ____.

A) rises; increases

B) rises; probably changes but more information is needed to determine if it increases or

decreasesC) probably changes but more information is needed to determine if it rises or falls;increases

D) falls; probably changes but more information is needed to determine if it increases ordecreases

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FALL 2013 Makeup Exam