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UW-Madison ECON 101 - Economics 101 Second Midterm Exam

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Second Midterm Exam, Page 1 of 11 Economics 101 Professor Scholz Second Midterm Exam, Version #1 October 29, 2009 DO NOT BEGIN WORKING UNTIL YOU ARE TOLD TO DO SO. READ THESE INSTRUCTIONS FIRST. You have 75 minutes to complete the exam, which consists of 33 multiple-choice questions. The exam is worth 100 points. Each question is worth 3 points: you get 1 point for filling in the requested information correctly. Please answer the questions on your coding sheet with a #2 pencil. Be sure to fill in the coding sheet carefully and accurately. Please also turn in your exam with name, ID, and student number. Name____________________ ID _________________ Student number _____________ How to fill in the coding sheet: 1. Fill in the bubbles on your answer sheet with your last name, first name, and middle initial. 2. Fill in the bubbles so we know your student identification number. 3. Fill in the bubbles under "Special Codes" spaces ABC so we know the discussion section number for which you are officially registered. Discussion sections are listed below: 4. Finally, after filling in your section code, please put the exam version in the “Special Codes” spaces. You will end up with a 4-digit “Special Codes” number – a three digit section number followed by a one digit exam number. Georgy Loginov William Nicholson Jiao Shi Fumihiko Suga 305 F 1:20 307 W 4:35 302 F 2:25 301 W 3:30 306 W 4:35 314 F 11:00 316 F 12:05 304 F 8:50 309 W 3:30 318 F 8:50 311 F 11:00 313 F 9:55 312 F 9:55 Carly Urban Matthew Friedman Irina Merkurieva Michael Pistone 310 F 2:25 331 W 3:30 335 F 1:20 337 F 2:25 315 F 12:05 332 W 4:35 341 F 9:55 338 F 12:05 317 F 8:50 347 F 8:50 343 F 11:00 319 F 1:20 345 F 2:25 Evangelos Stravelas Yuan Yuan 330 W 3:30 336 F 11:00 333 W 4:35 339 F 12:05 334 F 1:20 340 F 9:55 342 F 2:25 346 F 8:50 If you have a question during the exam, stay seated and please raise your hand. To show respect to your fellow students, please stay seated in your exam seat for the full 75 minutes. All exams and answer sheets must be turned in as you leave the exam. The exam will be discussed in section next week. Relax. Stop, take a deep breath, and think carefully before you answer any questions. Good luck!Second Midterm Exam; Page 2 of 11 Answer these multiple choice questions on the scantron sheet, selecting the best answer. 1) Using the following graph that shows total costs, what is the level of variable costs when 6 units are produced? a) $50 b) $100 c) $400 d) $500 e) Not enough information is given 2) The following table gives cost information for the production of soccer balls. Some values are missing, however. Which of the following statements is true? Quantity Variable Cost Fixed Cost Total Cost Average Variable Cost ($ per unit) Marginal Cost ($ per unit) 0 0 30 30 0 - 1 10 B 10 E 2 25 C D F 3 A 75 15 G a) A=45, E=40 b) A=45, E=10 c) A=75, E=40 d) A=75, E=10 e) Not enough information is given in the table to answer the questionSecond Midterm Exam, Page 3 of 11 You are given the following information that you should use to answer the next four questions. The retail market demand curve for computers in Madison, Wisconsin is perfectly competitive and characterized by the following demand curve: P=2000-4Q. Supply is P=500+Q. Total costs are 2200 400 2TC q q=+ + and the corresponding marginal costs are 400 4 .MCq=+ 3) How many firms are in this perfectly competitive industry in the short run? a) 3 b) 4 c) 5 d) 6 e) None of the above 4) In the short run, the firms make ____________ of ______________? a) Losses, $20,000 b) Profits, $20,000 c) Losses, $19,800 d) Profits, $19,800 e) None of the above 5) In the long run, the equilibrium price that ensures $0 economic profits will be earned is a) $400 b) $440 c) $480 d) $520 e) The problem is not well-specified, because competitive firms need to earn economic profit in the long run. 6) The equilibrium number of firms in the long-run is a) 19 b) 25 c) 30 d) 35 e) 39Second Midterm Exam; Page 4 of 11 7) The following table gives the marginal cost for a perfectly competitive firm of producing different quantities. Their fixed costs equal $30. Output Marginal Cost ($ per unit) 0 0 1 12 2 10 3 11 4 13 5 18 6 25 Which of the following prices will the firm make negative profits but still remain open in the short run? a) $5 b) $12 c) $20 d) $25 e) Not enough information is given. 8) Michael’s demand for sweaters is 1000 2 .PQ=− Jiao’s demand for sweaters is 400 4 .PQ=− Their “market” (or aggregate) demand when price is below 400 is a) 4400 .3PQ=− b) 1400 6 .PQ=− c) 1400 6 .QP=− d) 4800 .3PQ=− e) The correct answer is not listed. 9) For a perfectly competitive firm, as quantity increases a) marginal revenue decreases b) marginal revenue stays the same c) marginal revenue increases d) marginal cost decreases e) One can’t say given the information provided.Second Midterm Exam, Page 5 of 11 10) In the following figure, when the price of good X increases, the substitution effect is given by _____________________, and good Y is ___________________. a) The change in Q indicated by points 4 to 5, and inferior. b) The change in Q indicated by points 2 to 1, and normal. c) The change in Q indicated by points 6 to 4, and inferior. d) The change in Q indicated by points 6 to 4, and normal. e) The change in Q indicated by points 6 to 5, and normal. 11) As you discovered in your readings, Ken Chen studies economics by doing research on capuchin moneys. Chen showed a) That monkeys, when given an opportunity, behave in a manner consistent with perfectly competitive businesses. b) That monkeys are more reliable subjects than undergraduates for conducting economic research. c) The monkeys responded rationally to simple incentives, irrationally to risky gambles, failed to save, and stole money when they could. d) Demand for most things that monkeys like is elastic. e) There are no inferior goods when doing lab experiments with monkeys. 12) Suppose utility is 12()UXY= where the .YMRSX= If 15, 30 and income is $900.XYPP== Optimal consumption is a) X=30, Y=30 b) X=40, Y=10 c) X=20, Y=20 d) X=30, Y=15 e) X=60, Y=0Second Midterm Exam; Page 6 of


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