Final Exam 2 Micro Econ 2106
Final Exam 2 Micro Econ 2106 ECON 2106
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This 15 page Study Guide was uploaded by Vraj Patel on Tuesday June 21, 2016. The Study Guide belongs to ECON 2106 at Georgia State University taught by in Summer 2015. Since its upload, it has received 166 views. For similar materials see PRINCIPLES OF MICROECONOMICS in Economcs at Georgia State University.
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Date Created: 06/21/16
ECON 2106 - Principles of Microeconomics Exam 2 Maymester Term – May 20, 2016 Directions for the exam: 1 You are responsible for reading and following all directions for the exam; go through the directions for each section carefully (don’t lose points because you didn’t follow directions). 2 There will be 40 multiple choice questions. Each scores 1 point and the total points you can earn from multiple choice questions is 40 points (40*1). 3 You will get 1 hour and 15 min to write this exam. Use your time accordingly. 4 Fill up the scantron neatly for full credit. 5 Turn off all electronic devices. Any exam disruption (as determined by the Professor) will result in a demerit of 10 points off the exam score. 6 Focus only on your own exam; don’t look at anyone else’s paper. Any student looking at another’s paper will have the exam taken away and receive a 0 for the exam and possible academic action. 7 Ask me if you have a question about the requirements or format. 8 You are required to listen to and follow all verbal directions given in class by me during the exam period. My signature below indicates that I have read and understood the directions for the exam and that I am responsible for following all the directions on the exam sheets. My signature also indicates that I will follow the GSU Policy on Academic Honesty and will not use any outside sources or consult with any other student in taking this exam. I understand that failure to follow this Policy will result in a 0 for this exam and possible academic action. You must complete this section for the entire exam to be accepted. Signature Date Panther ID Print Name ___________________________________ Version February Page 1 Page 2 Multiple Choice Questions Use your Scantron to answer all the multiple choice questions below: 40*1=40 points 1. A price floor is a ________ set ________ the equilibrium price. A) minimum price; above B) maximum price; above C) minimum price; at D) maximum price; below 2. If the government imposes an excise tax in a market in which the demand curve is perfectly inelastic, the burden of the tax will fall completely on the ________, and the deadweight loss will equal ________. A) consumers; zero B) producers; zero C) consumers; the government's tax revenue D) producers; the government's tax revenue 3. The burden of a tax that is imposed on a good is said to fall completely on the consumers if the: A) price paid by consumers does not change. B) price paid by consumers for the good increases by the amount of the tax. C) wages received by workers who produce the good increase by the amount of the tax. D) price paid by consumers for the good declines by the amount of the tax. 4. When the minimum wage increases: A) unemployment among skilled workers decreases. B) employment of unskilled workers increases. C) unemployment among unskilled workers increases. D) fewer workers are willing to work off the books. 5. If the government feels that the price in the market is too low for the ________, it can impose a ________. A) consumers; price ceiling B) consumers; price floor C) producers; price ceiling D) producers; price floor Page 3 6. Given any downward-sloping demand curve for a good, the more price-elastic the supply curve, the ________ equilibrium output will fall and the ________ will be the deadweight loss when the government imposes an excise tax. A) more; larger B) less; smaller C) more; smaller D) less; larger 7. In a black market, goods or services are bought and sold: A) at night. B) without any information about quality. C) without any information about price. D) illegally. 8. When marginal cost is below average variable cost, average variable cost must be: A) at its maximum. B) at its minimum. C) rising. D) falling. 9. Suppose the government imposes a $4 per month excise tax on cable TV. If the demand for cable TV is relatively inelastic and the supply curve is relatively elastic, then the price of cable TV will: A) increase by exactly $4. B) increase by less than $4. C) increase by more than $4. D) remain constant. Page 4 Use the following to answer question 10: 10. (Table: Marginal Cost of Sweatshirts) Look at the table Marginal Cost of Sweatshirts. The marginal cost of the third sweatshirt is: A) $13. B) $9. C) $11. D) $33. 11. Which of the following cost concepts is correctly defined? A) TC = AVC + AFC B) MC = ▯TC / ▯FC C) ATC = AVC + AFC D) ATC = VC + FC 12. Expenses associated with factors of production may be: A) explicit costs. B) implicit costs. C) opportunity costs. D) implicit costs, opportunity costs, or explicit costs. 13. Which is not an inefficiency caused by price floors? A) inefficiently low quality B) inefficient allocation of sales among sellers C) wasted resources D) illegal activity Page 5 14. The deadweight loss from an excise tax is largest if demand: A) is inelastic and supply is elastic. B) and supply are both inelastic. C) is elastic and supply is inelastic. D) and supply are both elastic. 15. A binding price ceiling is designed to: A) keep prices low. B) prevent shortages. C) increase efficiency. D) increase the quality of the good. Use the following to answer question 16: Figure: The Market for Hamburgers 16. (Figure: The Market for Hamburgers) Look at the figure The Market for Hamburgers. If the market is originally in equilibrium and the government imposes an excise tax of $0.80 per unit of the good sold, the deadweight loss associated with the tax will be: A) $240. B) $40. C) $90. D) $105. Page 6 17. Which situation would most likely cause a decrease in consumer surplus in the toy market? A) There is an unexpected baby boom. B) Consumer income increases. C) A new assembly line design increases worker productivity. D) The cost of shipping increases because of higher oil prices. 18. The incidence of a tax: A) refers to how much of the tax is actually paid by consumers and producers. B) is a measure of the revenue the government receives from the tax. C) refers to who writes the check to the government. D) is a measure of the deadweight loss from the tax. 19. Suppose the government imposes a $10 excise tax on the sale of sweaters by charging suppliers $10 for each sweater sold. Using economic analysis, we would predict that: A) consumers of sweaters will bear the entire burden of the tax. B) the price of sweaters will decrease by $10. C) the price of sweaters will increase but by less than $10. D) the price of sweaters will increase by $10. 20. The implicit cost of capital is: A) the expense associated with leasing machines. B) irrelevant for determining economic profit. C) the expense associated with buying machines. D) the opportunity cost of capital used by a business. 21. Profit computed using explicit costs as the only measure of costs is: A) implicit profit. B) accounting profit. C) economic profit D) explicit profit. 22. Total surplus is: A) measured as the area between the supply and demand curves from their beginnings to their ends. B) the total net gain to producers from trading in the market. C) the total net gain to consumers from trading in the market. D) the sum of consumer and producer surplus. Page 7 23. If the price of a good rises, then producer surplus: A) may change, but we can't tell how. B) will increase. C) will remain the same. D) will decrease. 24. If the demand curve is downward sloping and supply is perfectly elastic, then the burden of an excise tax is: A) borne entirely by consumers. B) shared by consumers and producers, with the burden falling mainly on consumers. C) shared by consumers and producers, with the burden falling mainly on producers. D) borne entirely by producers. Use the following to answer question 25: 25. (Table: Production Function for Soybeans) The table shows a production function for soybeans. Assume that the fixed input, capital, is 10 acres of land and a tractor, which have a combined cost of $150 per day. The cost of labor is $100 per worker per day. The variable cost of producing 45 bushels of soybeans is: A) $100 B) $350 C) $4500 D) $200 Page 8 Use the following to answer question 26: 26. (Table: Producer Surplus and Phantom Tickets) Look at the table Producer Surplus and Phantom Tickets. Given the information in the table, if the price for Phantom tickets is $55, total producer surplus for the five students is: A) $79. B) $64. C) $84. D) $54. 27. If an excise tax is imposed on beer and collected from the producers, the ________ curve will shift ________ by the amount of the tax. A) demand; upward B) demand; downward C) supply; upward D) supply; downward 28. Given any downward-sloping demand curve for a good, the more inelastic the supply curve, the ________ equilibrium output will fall and the ________ will be the deadweight loss when the government imposes an excise tax. A) more; larger B) more; smaller C) less; larger D) less; smaller 29. The elasticity of demand for Gala apples is relatively elastic, so if a tax is levied on the consumers of Gala apples, the tax incidence: A) cannot be determined without more information. B) is typically on consumers more than producers. C) is typically split equally between consumers and producers. D) is typically on producers more than consumers. Page 9 30. A price ceiling is: A) a minimum price buyers are required to pay for a good or service. B) a maximum price sellers are allowed to charge for a good or service. C) the difference between the quantity supplied and quantity demanded. D) the deadweight loss caused by an inefficiently low quantity. Use the following to answer question 31: 31. (Table: Consumer Surplus) Look at the table Consumer Surplus. If the price of a ticket to see The Nutty Nutcracker is $75, Lois's consumer surplus is: A) $75. B) $60. C) $100. D) $25. 32. If an excise tax is levied on suppliers, then the incidence of the tax: A) is typically on the consumer more than the producer. B) is typically split equally between the producer and the consumer. C) cannot be determined without more information. D) is typically on the producer more than the consumer. 33. An input whose quantity cannot be changed in the short run is: A) a fixed input. B) a variable input. C) an incremental input. D) a marginal input. Page 10 34. Suppose the demand for good X is perfectly inelastic and a tax is levied on the producers of each unit. Which of the following is a result of this tax? A) Consumers pay the entire tax, and there is no deadweight loss because the equilibrium quantity of good X remains constant. B) Consumers and producers share the burden of the tax, and there is no deadweight loss because the equilibrium quantity of good X remains constant. C) Consumers pay the entire tax, and deadweight loss will occur because the equilibrium quantity of good X falls. D) Producers pay the entire tax, and deadweight loss will occur because the equilibrium quantity of good X falls. 35. When there is a bountiful harvest of grapefruit, total consumer surplus in the grapefruit market: A) will remain the same. B) will decrease. C) may change, but we can't tell how. D) will increase. 36. When the government imposes an excise tax in a market: A) producer surplus falls. B) consumer surplus falls. C) consumer surplus falls, producer surplus falls, and a deadweight loss is created. D) a deadweight loss is created. 37. When a market is efficient: A) there is no way to make some people better off without making other people worse off. B) producers whose willingness to accept a price that is greater than the market price are able to sell their good. C) there are ways to make everyone better off. D) consumers who value buying a good the least are the ones who are able to purchase the good. 38. In the long run: A) all inputs are variable. B) at least one input is variable and one input is fixed. C) inputs are neither variable nor fixed. D) all inputs are fixed. Page 11 Use the following to answer question 39: Figure: Rent Controls 39. (Figure: Rent Controls) Look at the figure Rent Controls. If rent controls are set at Rent 0 renters would be willing to pay a price at least as high as ________. A) Rent fo4 Q uni0s B) Rent 4or Q u1its C) Rent fo3 Q uni1s D) No one would be willing to pay a higher actual price than Rent . 0 Page 12 Use the following to answer question 40: Figure: The Market for Music Downloads 40. (Figure: The Market for Music Downloads) Look at the graph The Market for Music Downloads. If the government imposes a tax of $3 in this market, the government will receive tax revenue of: A) $75. B) $20. C) $60. D) $30. 41. Which of the following statements about the effects of an excise tax is incorrect? A) The lower the elasticity of supply relative to the elasticity of demand, the lower the burden of the tax borne by suppliers. B) An excise tax is inefficient because it distorts incentives at the margin for both consumers and producers. C) An excise tax causes a deadweight loss because consumer and producer surpluses are reduced by more than the revenue the government collects. D) An excise tax drives a wedge between the price paid by consumers and the price received by producers. Page 13 42. The term diminishing returns refers to: A) a reduction in profits caused by increasing output beyond the optimal point. B) a decrease in total output due to the firm hiring uneducated workers. C) a falling interest rate that can be expected as one's investment in a single asset increases. D) a decrease in the extra output due to the use of an additional unit of a variable input when all other inputs are held constant. Page 14 Page 15
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