Professor M Rush ECO 2023 SPRING 2014 MAKE UP TEST Read all instructions on this page This test is governed by UF s academic honesty code This test has 34 questions IF you are using this test to make up for missing either Midterm 1 or 2 answer the first 30 questions if you using this test to make up for missing the final exam answer all 34 questions Choose the best answer for each question Unless you are specifically told otherwise on this test do not assume that demand or supply is either perfectly elastic or perfectly inelastic On the bubble sheet please enter 1 Your name and initials 2 Your UF ID number 3 Form code A 4 Sign your name on the bubble sheet Check if the form code and UF ID number you bubbled in are correct now Also check to be sure your name is correct do it now I investigated the rumor that the ability to correctly record these had been mastered by a few students at FSU This rumor turned out to be false But the rumor that an accounting major and a journalism major did successfully record these on a test is true These students have since been bronzed and are on display outside their respective colleges to serve as an inspiration for all other accounting and journalism students CHECK YOUR FORM CODE AND UF ID NUMBER IF YOU GET EITHER OF THESE WRONG YOUR TEST MIGHT NOT BE GRADED AND IF IT IS GRADED YOU WILL LOSE 3 POINTS TURN OFF ALL CELL PHONES AND OTHER COMMUNICATION DEVICES You may not use a cell phone or any other sort of device that allows for communication as your calculator E C O 2 0 2 3 M A K E U P E X A M S P R I N G 2 0 1 4 I have become increasingly concerned that some students are at a real disadvantage because they are unwilling to ask questions during the exam while others ask a lot of questions Hence to level the playing field I have decided to eliminate all questions during the test I don t like this policy but it seems the fairest policy Do not ask questions of me or the TA s in the interest of fairness I have instructed them not to answer any questions during the exam You will have one hour 60 minutes to complete the exam and bubble in all your answers When the TAs say that time is up you must hand in your exam We will not give extra time to finish bubbling in the answers so be sure you are done when the 60 minutes are up Of course you may hand in your test at any time before the 60 minutes are up An answer key will be posted on the class web page tomorrow The test scores will be on class web page within a few days Once you see the answer key you might have a question about why one answer is right and another is wrong For these questions email me at mark rush warrington ufl edu Do NOT email the grader about these questions After the scores are posted if you think your posted score is incorrect then email the grader at eco2023 grader warrington ufl edu If you email me about your test score I will not forward the email nor respond to you you MUST email the grader You have one week after the curved score is posted to request a grade check After a week the score will not be changed If the web reports what you bubbled in for each question and you ask the grader to check an answer because you believe you bubbled in something other than what is reported and the reported answer on the web is correct you will lose 1 additional question 2 E C O 2 0 2 3 M A K E U P E X A M S P R I N G 2 0 1 4 1 The Coase theorem is the proposition that if property rights exist and transactions costs are low external costs result in deadweight losses external benefits result in deadweight losses efficiency will result without need for further government action the government needs to intervene in the market to guarantee efficiency None of the above are correct 2 The distribution of income in the United States has become more unequal between 1970 and 2014 One explanation for this trend is that advances in technologies have low skilled labor and high skilled labor A B C D E A B C D E decreased the demand for increased the demand for increased the demand for decreased the demand for decreased the supply of increased the supply of increased the supply of decreased the supply of increased the supply of increased the demand for Lower prices Sears Lower prices S 5 million W 9 million Don t lower prices S 11 million W 8 million S 30 million W 4 million S 20 million W 40 million Walmart Don t lower prices 3 Sears and Wal Mart must decide whether to lower their prices based on the potential economic profits shown in the table above In the above table who has a dominant strategy A Walmart has a dominant strategy but Sears does not Sears has a dominant strategy but Walmart does not B Both Walmart and Sears have dominant strategies C Neither Walmart nor Sears has a dominant strategy D E None of the above are correct 4 More pizza delivery companies open As a result the equilibrium price of a delivered pizza and the equilibrium quantity A B C D rises increases falls decreases rises decreases falls increases 3 E C O 2 0 2 3 M A K E U P E X A M S P R I N G 2 0 1 4 5 When the price rises 4 percent the quantity demanded decreases 10 percent Hence the elasticity of demand equals 40 0 25 0 0 4 2 5 None of the above are correct A B C D E A B C D A B C D 0 18 0 10 0 08 0 02 raises increases raises decreases lowers increases lowers decreases 6 If the marginal social cost of generating a kilowatt of electricity is 0 10 and the marginal private cost is 0 08 what is the marginal external cost 7 Pizza and hamburgers are substitutes for consumers A fall in the price of a pizza the price of a hamburger and the quantity of hamburgers a b c t h n o m r e p s n o i l l i m s a d o S 50 40 30 20 10 0 10 20 30 50 Pizzas millions per month 40 8 In the figure above A B C D moving from point a to point b would require new technology production at point b is efficient whereas production at point a is not efficient some resources must be unemployed if production is at point c the opportunity cost of …