中级微观经济考试试题3

[Jo100.:=.50?-'+0-SO.~80"-6Name:--.k1Sr------------ECON 3310:Intermediate MicroeconomicTheoryExam 3,Fall 2009There are 40questions worth 2.5points each.Mark your answers on your scantron and on this exam.I)A I"degree price discriminating monopolist sells the same amount as ,but he turnsinto .'-A-)-a-3ii1~de-gr-ee price discriminating monopolist;consumer surplus;producer surplus B)any other monopolist;deadweight loss;consumer surplus ~a perfectly competitive finn;profit;producer ~urplus(E2)perfectly competitive finn;consumer surplus;producer surplus2)In the short run,if a competitive finn operates,it eams a profit of $500.The fixed costs ofthe finn are ~O.This finn has a producer surplus of W$600ps =IX'-VC-.B)$500PS~FC:::'TtZ.-vC-FCC)$400,?S -Fe..~IT'-])PS -::.7T tf-CD)$100.Use the following scenario for questions 3-5.A weapons producer sells guns to two countries.The total cost of producing guns is TC =100+20Q:Thedemand for guns from the two countries can be represented as:QA =50-2p;;)~QB=200-5p 3p -:::.:;100-Q13>P=40-~•.53)If the weapons producer can price discriminate,then his marginal revenue in country B is ,~40Q-Q2/5'On::IJ.,O f;',(}...-Rla'l-,!VIn=ltD -.2.ex b<pO-(2/5)Q1"'q."1...U(I;)~'I \L.--:>C)50-Q .5D)40-2Q4)If the weapons producer can price discriminate,he will sell Q =in country B and charge a priceof.rn R.:=rY'i'A)100;20I ,\.-.-.=D~5;50Yo -fLR\=QDC 0;305U\.)40;30~eaponsproducer profits in country B are equal to~~~!)IV -:=p~-Ie .~~~~5oC~O).-~OO 1-/)D(n»JI S orr-C'100)0=:Lfoo.-Name:---------------labor Output110(021883240428<{530'L6)The above figure shows the short-run production function for Albert's Pretzels.The law of diminishing~!linal productivity ,and this likely results because_~irst appears with the second worker;Albert does not buy more ovens.B)first appears with the fifth worker;Albert does not buy more ovens.C)first appears with the fourth worker,Albert does not motivate his workers.D)does not appear for any level of labor;Albert has bought new oven.7)George is a business traveler and often makes plane reservations at the last minute to Nashville.Loretta isa leisure traveler and likes to visit her friends in Nashville.If one airline serves their route,it is in theinterest of me air!ine to charge_~higher price to Loretta.~higher price to GeorgeC)them the same priceD)random price depending upon the day of the week the ticket is booked8)At the current level of output a firm's marginal cost equals17and marginal revenue equals20.Assuming~marginal costs are increasing with output,the firm~\'1\1' A hould produce more.m r<")Me...''"'-is producing the profit-maximizing amount.so1<-."of)fYlf)oLu WI]4C)should produce less.''-'''-'1-rr'"V a-D)Not enough information.r,,12-9)Pollution produced by the paint industry is a negative externality.In order to attempt to get the level of pollution closer to the optimal level,the government couldA)impose a tax on paint factoriesi g iVe the factories tradable pollution permitsoth A)and B)None of the above.10)The demand curve for a Giffen good(over all price ranges)would be---A)horizontal.f ownward sloping.C pward sloping.vertical.11)Let P=price;MR=marginal revenue;and MC=marginal cost.For a profit-maximizing monopolist,A)P=MR=MC.B)P=MR<MC.~P=MR~MC.~P>MR-MC.Name:-------------12)At!oey's Lawncutting Service,a lawn mower cannot cut grass without a laborer.A laborer cannot cut grass Wlt~out a la,:"n mower.",'hich graph.in the above figure best represents the isoquants for Joey'sJ..\wncuttmg Service when capital per day IS on the vertical axis and labor per day is on the horizontal axis?4 WGraphAB)Graph BC)Graph CD)GraphDUse the following scenario for problems13-14.Charlie has a utility function U(x,y)=xl,the price ofx is$2,the price of y is$4,and his income is$60.~Charlie's Marginal Rate of Substitution(MRS)isA y/(2x)mQ5~-m u'"--U1?--(2y)/x_--C-""~--Y--C)-y/x m/)~:2X tA...-D)-x/y()-14)Charlie's utility-maximizing choice ofx and y is_.J IA)x:2?;~=5~-"2f>L.f'lr-'='"'t'f..~-0,y-15a-"/.'-t!A-"'V~=10;Y=10U A,D)x=15;y=7.5IS)Consider the following estimated regression equation,where the natural log of pork consumption is a .function of the'natural log of pork price and the natural lo~o~~6btrjce:InPork=1.1-.47lnPorkPrice+ ,.,.JJ.lnBeefPrice.Based on this information,all ofthe follow~~'"be true EXCEPT:,(_~'a I%increase in pork price leads to a47%decrease in pork consumptionB)pork consumption is price inelasticC)pork is a normal goodD)pork and beef are substitutes16)The amount of education you attain is likely than the efficient level because of the_____externalities it provides.A)less,negativeB)more,negativeC)more,positive~ess,positiveName:QlJlIntityolMartltYnallOWll17)Refer the above figure.~colate chips is~=IO;q=IOB)p =20;q =10C)P =20;q =20D)P =10;q =520I'18171815,.1312"I '•87654321•246QW,"tityo!ChocolateChlpoSuppose the consumer has an income of $200.A point on his demand curve for oQ18)The above figure shows supply and demand curves for manual labor (Q=halfhours of labor).In an effort to help workers,the government passes a law that establishes a $3wage per half hour of labor.This would result in---A)a shortage of workers B)a surplus of workers ~~nemployment r...:::J'oth B)and C)Name:-----------Price$201510oMarginal CostDemandQuantityMarginal Revenue19)Refer to the figure above.To maximize its profit,a monopolist would choose which of the following outcomes?ilOO un!ts of output and a p~ce of $10per unit 100umts of output and a pnce of $20per unit 150units of output and a price of $15per unit D)200units of output and apriceof $20perunit20)Refer to the figure above.The deadweight loss caused by a profit-maximizingmonopoly amounts toA)$150.vi{)I~1fz.,bIA=V 2.~Q))~QO-IQ).t$200.L.-'Ii'/))C $250.2-SO /6-::(25D.)$300.21)Rank the below kinds of markets in terms of prices charged,from highest to lowest.t;monoPol Y ,perfect competition,oligopoly B onopoly,oligopoly,perfect competitionmonopoly,perfect competition =oligopoly D)perfect competition,oligopoly,monopoly22)At the current price of a theme park ride ($2)Al goes on 5rides and has a consumer surplus of 13.The largest flat ad~n fee the theme park could charge Al would beNIO ~n.C)13D)3023)There are three firms in your city.Each firm produces 20units of pollution for a total of 60units of pollution.It costs Firm A $100,Firm B $60,and Firm C $20to reduce pollution by 10units.Suppose the government decides that the maximum amount of pollution needs to be 30units.We know,according to the ____Theorem,that Firm __will STOP polluting.~coase,A Boase,C )Nash,B D)Nash,AName:---------------Use the following scenario for questions24-25..Suppose the market for Hostess ding dongs is given by:Demand:QD=400-2pSupply:QS=198p~If a$1tax is imposed on consumers,then the price received by sellers isB)~i:;;QO~400-:;2(pS+I)=L/CO_-:vP-s-;L;;=.3q8-d-D sC)$2.99.(l D~Q;'=-I q d)S_3~ri_2Jns~-rD)$10.99~Of--,ll-r=-1--'~f5=~'7!25)In the problem above,the quantity sold in the presence of the tax is-',and the tax revenue isA)432.50;$394.02 .JU,394.02,$1 (..gI394.02;$394.02 D)I,$1Q-=-Iq8(1,~Cf)-3Q'-102-Rw~I(::>q'-j,02)~sf3ql.-/.(72.Use the following information to answer questions26-27.Two cigarette manufacturers(Firm A and Firm B)are faced with lawsuits from states to recover the health care related expenses associated with cigarette smoking.Both cigarette firms have evidence that indicates that cigarette smoke causes lung cancer(and other related illness).State prosecutors do not have access to the same data used by cigarette manufacturers and thus will have difficulty recovering full costs without the help of at least one cigarette firm study.Each firm has been.presented with an opportunity to lower their liability in the suit if they cooperate with attorneys representing the states.Each must decide whether to concede that smoking causes lung cancer or argue that it doesn't.Payoffs are measured in billions of dollars(in losses).Firm B(Player2)Concede Ar ueFirm A(Player1)ConcedeArgue26)Pursuing its own best interests,Firm B will concede that cigarette smoke causes lung cancerA)only if Firm A concedes that cigarette smoke causes lung cancer.B)only if Firm A does not concede that cigarette smoke causes lung cancer.@regardless of whether Firm!"c?ncedes thatcigarette s~oke ca~ses lung cancer.D)none of the above;in pursuing ItS own best Interests,Firm B will In no case concede thatcigarette smoke causes lung cancer.27)The Nash Equilibrium of this game isA)(Argue,Concede)..!!t(Concede,Argue)(g)l(Concede,Concede)D)(Argue,Argue)Name:--------------(d,0)I (5,q)-?"'(-2,-2)(~)~)-L,28)The "Prisoner's Dilemma"game applied to oligopolies shows that A)in an oligopolistic market firms are worse off if they cooperate B)Nash Equilibria always yield the highest payoffs .~the collu.sive ~utcome is harder to sust~in when the game is repeated indefinitely .I(;!lthere are mcentlves to cheat on a cooperatIve agreement that is not a NWuilibrium1L f2...(2,0)(3,9)(-2,-2)(4,4)29)Given the payoffs,if the game above were played simultaneously,what is (are)the Nash Equilibrium ~ilibria)?"~R,R)B)(R,R)and (R,L)C)(R,L)D)(L,L)and (R,R)30)Consider the above game.If the game above were played sequentially,then we would predict the most likely outcome to be A)(L,L)J}l(L,R)~R,R)D)(R,L)p5eQQ,31)The above figure shows supply and demand curves for apartment units in a large city.When a rent ceiling of $350is imposed,consumer surplus ~doesnotchange ~hanges from (a +b +f)to (a +b +c)C)changes from (a +b +f)to (a +b +c +f +g)D)decreasesName:--------------Use the following information to answer questions32-34.Imagine a small town in which only two residents,Tony and Jill,own wells that produce water for safe drinking.Each Saturday,Tony and Jill work together to decide how many gallons of water to pump,bring the water to town,and sell it at whatever price the market will bear.To keep things simple,suppose that Tony and Jill can pump as much water as they want without cost;therefore,the marginal cost of water equals zero.The weekly town demand schedule and total revenue schedule for water is reflected in the table below.WeeklyQuantity(in gallons)o102030405060708090100110120Price$121110987654321oWeeklyTotal Revenue(and Total Profit)$0110200270320350360350320270200110omR<o32)If the market for water was perfectly competitive instead of a monopolistic,how many gallons of water would be produced and sold?1'1L Al..:.I20P.-::.!vi C-:=:0LA-U'-'(A)70B)90C)110~12033)As long as Tony and Jill operate as a profit-maximizing monopoly and split production,what will Jill's weekly revenue equal?m(2..::;m CA)$175B)$180~$350~$36034)Jill decides to fool Tony and increase her production by10gallons.If Tony remains at their.agreed-upon monopoly level,what will Jill's'profits be now?~$175B)$200$350D)$360...b(Q)-500-5Q In a Coumot model,firm1and2 35)Suppose the demand functIOn for cable IS gIven y p-..,fi b.maximize profits.Suppose they each face a marginal cost of10.FIrm2s pro It can e wntten as~500-5(q,+q,)]q,-1Oq,B)[500-(q,+q,)]q,.IOq,C)[500-5(q,+q,)]q,.1Oq,D)[500-5qtlq,-IOqlName:---------------oW/J(b)36)If Sally supplies fewer hours of labor in response to a wage increase (assume leisure is a normal good),then ...W _-~e mcome effect equals the subslttulton effect.)-1-5)5b-e income effect is greater than the substitution effect.the substitution effect is greater than the income effect.5f":>L C D)the labor supply curve is upward sloping.(ajPrice PriceSupplyoSupply,ATeP 2P 2P,P,PoPoQ,Q 2QuantityQ~rt:dtQuantity(jf37)Refer to the figure above,which depicts the market for chicken for a representative firm and the industry as a whole.Assume that the market for chicken starts in long-run equilibrium at point A in panel (b).An increase in demand from Demand o to Demand t occurs due to an outbreak of mad cow disease.In the short-run,profits are .In the long run,the price will be and profits will be A)positive;P z ,0~nega~iVe;Po,negative C OSttlve;P"0)negative;P"positive38)The competitive firm's supply curve is equal to~the portion of its marginal cost curve that lies above AFC.B the portion of its marginal cost curve that lies above AVC.)the portion of its marginal cost curvethat lies above AC.D)its marginal cost curve.39)Suppose TC =10+qZ +4q.A)2P""MC.~:~O =-P-Cb tY~oIf P =20,a competitive firm will produce q =_8~hLg =-(;)L)L~=;)J-t-/.f~/....2-Iv=~-mPLmPK~).(,~LI,.40)Given the profit-maximizing level of output the firm chose in 39)above when p =20,now suppose it has a production function q =KL.Also suppose the wage rate is $8,and the cost of capital is $4.Assuming it can change levels of capital and labor,how much labor will it hire when it minimizes costs?...Al.L =0C,yL=2C)L=4D)L=8。