Version 2 Page 1 Name: __________________________ Date: _____________ Econ 2010 sec. 100 Final: Version B Fall 2011 1. The MRT (marginal rate of transformation) is the slope of a (an) ___. A) Indifference curve. B) Isoquant. C) Production Possibility Frontier. D) Utility Possibility Frontier. 2. Santa Claus on Christmas Eve is A) A good example of a public commodity because his time is not congestible. B) Not a public commodity because his services on Christmas Eve are excludable C) A good example of a public commodity because his time is not rivalrous. D) Not a public commodity because his services on Christmas Eve are not congestible. 3. Thelma's love for Wayne never waned. A) True B) False 4. You come home to find that your dog, Killer, is missing. Where he once sat is a ransom note: "$500.00 or Killer dies." You have $500.00 in savings earmarked for a new bike. You pay the ransom with that $500. What is the opportunity cost of your decision? A) the bike and a live Killer B) a dead Killer C) the bike D) the bike and a dead Killer 5. Assume there are 5 identical firms in a perfectly-competitive market, each with the marginal cost curve MC=0.5Q. When the market price is 500, the total supply of this five-firm economy will be___. A) 1000 B) 500 C) 250 D) 5000Version 2 Page 2 6. Imagine a world where everyone has to pay for their own medical care. Suppose that smoking cigarettes creates no negative or positive external effects, but, as is well known, causes a lot of smokers to get lung cancer. If the government does not interfere in the cigarette market, then________. A) There is not enough information to answer the question. B) The market equilibrium quantity of cigarettes smoked will be less than the socially efficient number. C) The market equilibrium quantity of cigarettes smoked will be greater than the socially efficient number. D) The market equilibrium quantity of cigarettes smoked will be the efficient number from society's perspective. 7. If a society is producing on their PPF, then allocations are necessarily efficient. A) True B) False 8. If government officials set an emissions tax too high: A) there will be too little pollution from a social efficiency perspective B) there will be too much pollution from a social efficiency perspective C) the marginal social cost of pollution will exceed the marginal social benefit of pollution. D) the amount of pollution will necessarily be less efficient than if there was no emissions tax 9. Imagine Boulder is required by the Federal Government to reduce its toxic emissions from dry-cleaning facilities by 20%. The Boulder City Council achieves this goal by requiring every such facility in Boulder to reduce their toxic emissions by 20%. Which alternative most likely describes the result? A) The total emissions reduction s achieved at minimum cost B) The total emissions reduction is achieved, but not at minimum cost 10. Willy can only produce apples and carrots. Willy's production-possibilities frontier can be represented with the function C=20-3A where C is the number of carrots he produces and A is the number of apples he produces. For Willy, the opportunity cost of producing a carrot is ___ and the opportunity cost of producing an apple is ___ A) 3 apples, 3 carrots B) 3 apples, 1/3 carrot C) 1/3 apple, 3 carrots D) 1 carrot, 2 applesVersion 2 Page 3 11. If society's allocation of resources and distribution of goods is efficient, it still might be possible to increase the production of good X without decreasing the production of any other good. A) True B) False 12. An individual's weight elasticity of candy consumption is (choose the answer that is both correct and most complete) A) the percentage change in their candy consumption divided by the percentage change in their weight. It is a measure of how much their candy consumption would be affected by an increase in their weight. B) the percentage change in their candy consumption divided by the percentage change in their weight, It is a measure of how much their weight will be affected by an increase in candy consumption. C) the percentage change in their weight divided by the percentage change in their candy consumption. It is a measure of how much their weight will be affected by an increase in candy consumption. D) the percentage change in their weight divided by the percentage change in their candy consumption. It is a measure of how much their candy consumption will be affect by an increase in their weight. 13. Unregulated competitive markets evolved to increase efficiency, not equity. A) True B) False 14. For an economist, the statement, "I value my friendship with Marc more than I value my friendship with Don." simply means my WTA the loss of Marc as a friend is greater than my WTA the loss of Don as a friend. A) True B) False 15. If the price of gasoline rises and stays high for an extended period of time, we expect people to: A) reduce the number of miles they drive. B) buy smaller and more fuel-efficient cars. C) use more public transportation. D) reduce the number of miles they drive, buy smaller and more gas efficient cars, and use more public transportation.Version 2 Page 4 16. Karen consumes gasoline and other goods. A new excise tax on gasoline raises gas prices. However, the government pays Karen an income subsidy that is just enough for her to stay on her original (pre-tax) indifference curve. Her new optimal consumption bundle will have: A) the same amount of both goods as before. B) less gas and more of other goods. C) less of other goods and more gas. D) This question can't be answered, since some essential information (such as Karen's income, the pre- and post-tax prices of gas, etc.) is missing. 17. When production in a society is efficient, it is still often possible to make some members of society better off, without making any other members worse off. A) True B) False 18. There are three bundles: A, B, and C. I strictly prefer C to A, I strictly prefer B to A, and am indifferent between C and B. Is this ranking of bundles consistent with rationality in the economic sense of the term? A) Yes B) No C) Not enough information to tell 19. Which of the following is an environmental policy based on tradable pollution permits? A) allowing automobile drivers to buy and sell the right to a certain level of automobile emissions B) ignoring pollution and letting private markets operate without