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UW-Madison ECON 101 - Second Midterm

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Economics 101 Name _____________________________Fall 2011 TA Name __________________________11/22/11 Discussion Section #_________________Second Midterm Student ID # _______________________Version 1DO NOT BEGIN WORKING UNTIL THE INSTRUCTOR TELLS YOU TO DO SOREAD THESE INSTRUCTIONS FIRST.You have 75 minutes to complete the exam. The exam consists of 33 multiple choice questions. Each multiple choice question is worth 3 points for a total of 100 points. - We reserve the right to deduct one point for failing to fill out the scantron completelyand accurately and the exam booklet completely and accurately!- Answer all questions on the scantron sheet with a #2 pencil NO CELL PHONES, CALCULATORS, OR FORMULA SHEETS ARE ALLOWED.PICK THE BEST ANSWER FOR EACH QUESTION.How to fill in the scantron sheet: 1. Print your last name, first name, and middle initial in the spaces marked "Last Name,""First Name," and "MI." Fill in the corresponding bubbles below.2. Print your student ID number in the space marked "Identification Number." Fill in thebubbles. 3. Write the number of the discussion section you’ve been attending under "Special Codes"spaces ABC, and fill in the bubbles. You can find the discussion numbers below on thispage. 4. Write the version number of your exam booklet under "Special Codes" space D, and fillin the bubble. The version number is on the top of this page. If there is an error on the exam or you do not understand something, make a note on your exam booklet and the issue will be addressed AFTER the examination is complete. No questions regarding the exam can be addressed while the exam is being administered. When you are finished, please get up quietly and bring your scantron sheet and this exam booklet to the place indicated by the instructors.Discussion sections are as follows: MatthewFriedmanBrandonHoffmanTomConklingSean Lewis-FaupelAndrewKiddThur 3:30 301 Fri 11:00 309Fri 8:50 317Fri 9:55 312Fri 12:05 315Fri 1:20 314Thur 4:35 307Fri 9:55 311Fri 11:00 310Fri 2:25 302Thur 3:30 304Fri 12:05 316Fri 1:20 319Fri 2:25 313Thur 4:35 306Fri 8:50 318Fri 1:20 305Work SheetI, __________________________________, agree to neither give nor receive any help on this exam from other students. Furthermore, I understand that use of a calculator is an academic misconduct violation on this exam.Signed ____________________________________Use the following information for the next THREE (3) questions.Consider the market for peanuts. The market demand for peanuts is given by the following equation: QD=7.5-P. Market supply for peanuts is: QS=P – 1/2. Suppose the government levies an excise tax on producers of $2 per unit of peanuts sold.1. What is the equilibrium quantity supplied and net price received by producers after the government implements this excise tax on peanuts?a) P=$8, Q=3.5b) P=$3.5, Q=4c) P=$4, Q=3.5d) P=$3, Q=2.52. Given this excise tax on peanuts, what are the consumer and producer tax incidence that result from the tax?a) Consumer incidence=$2.50, Producer incidence=$2.50b) Consumer incidence=$8, Producer incidence=$8c) Consumer incidence=$3.50, Producer incidence=$2.50d) Consumer incidence=$2.50, Producer incidence=$3.503. What is the deadweight loss caused by the imposition of this excise tax?a) $1.20b) $1.00c) $2.00d) $1.504. In a perfectly competitive market, which of the following statements is a reason that a firm would exit the market in the short run?a) Marginal cost exceeds price at the profit maximizing quantity.b) Average variable cost is less than marginal revenue at the profit maximizing quantity.c) Minimum average total cost is greater than price.d) Minimum average variable cost is greater than price.5. A firm is producing at an output level such that the firm’s average total cost is greater thanits marginal cost. If this firm produces one additional unit of output, how will its average total cost change? a) The firm’s average total cost will increase.b) The firm’s average total cost will decrease.c) The firm’s average total cost will stay the same.d) The direction of change in the firm’s average total cost is indeterminate.6. The market for baseballs is perfectly competitive. In the long run, each firm is producing 100 baseballs and selling them for $2 each. What is the marginal cost of producing the 100th baseball for a firm in this industry?a) $2b) $200c) $1d) $0.02Use the following information to answer the next THREE (3) questions.Year CPI Nominal Price of Skittles1980 150 $0.601990 225 $0.752000 300 $1.50The above table provides information about the CPI and the nominal price of skittles for three different years. Assume that the base year for the data in the table is 1975.7. What is the percentage increase in the average price of all goods from 1980 to 2000?a) 350%b) 200%c) 100%d) 133%8. What is the real price of Skittles measured in 1975 dollars in the year 2000?a) $0.33b) $0.50c) $0.40d) $0.759. Look at the real price of Skittles between 1980 and 1990. The real price of Skittles _______ going from 1980 to 1990.a) Increasedb) Decreasedc) Stayed the samed) There is not enough information to answer this question.10. Suppose the market demand for trucks is P=55-2QD and the market supply for trucks is P=1+QS . In this market, suppose the government is going to implement an excise tax on truck producers in order to decrease the quantity of trucks sold to 15 trucks. How big will theexcise tax need to be in order for the government to successfully reduce truck purchases to this level?a) $3 per truckb) $6 per truckc) $9 per truckd) $10 per truckConsider the following information for the next THREE (3) questions.The current price of a box of Kleenex tissues is $1.50 and you are using 6 boxes. Also the currentprice of a roll of Charmin toilet paper is $0.50 and you are using 6 rolls. When the price of a box of Kleenex goes up to $2.50, you now use 4 boxes of Kleenex tissues and 10 rolls of Charmin toilet paper.11. Using the midpoint method (the arc elasticity method), what is the elasticity of demand for Kleenex when the price increases from $1.50 to $2.50?a) 0.8b) 2.5c) 0.5d) 0.33312. Suppose your demand curve for Kleenex is linear. Using the point elasticity of demand formula, what is the price


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UW-Madison ECON 101 - Second Midterm

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