Documentos de Académico
Documentos de Profesional
Documentos de Cultura
X the SECTION you regularly attend (that is where you will pick up your prelim):
Lamichhane, Sujan (sl2563)
____ DIS 230 M 10:10AM - 11:00AM GSH G22
____ DIS 231 M 11:15AM - 12:05PM GSH G22
____ DIS 232 M 12:20PM - 01:10PM GSH G22
Hu, Malin (mh975)
____ DIS 233 M 11:15AM - 12:05PM RCK 112
____ DIS 234 M 12:20PM - 01:10PM RCK 112
____ DIS 235 M 01:25PM - 02:15PM RCK 112
Walker, Caroline (cmw258)
____ DIS 236 T 10:10AM - 11:00AM RCK 122
____ DIS 237 T 11:15AM - 12:05PM RCK 122
____ DIS 238 T 12:20PM - 01:10PM RCK 122
Wang, Xiaolu (xw377)
____ DIS 239 W 10:10AM - 11:00AM MRL 107
____ DIS 240 W 11:15AM - 12:05PM MRL 107
____ DIS 241 W 12:20PM - 01:10PM MRL 107
Fieldhouse, Andrew (ajf263)
____ DIS 242 W 11:15AM - 12:05PM URH 202
____ DIS 243 W 12:20PM - 01:10PM URH 202
____ DIS 244 W 01:25PM - 02:15PM URH 202
GRADING
MC (out 56 points)=___________________
Q1 (out of 22 points)=_________________
Q2 (out of 22 points)=_________________
e1_1110_f2014
2. Abe, Betty, Chris and Dave work for Ed and make only mugs
and hats. Ed, the boss, came up with the data in the table. It
reports the maximum number of mugs and hats that each worker
can make. Workers can produce any linear combination of their
extreme values. Ed forgot to record how many hours each worker
actually worked. Given this information, which one of the
following statements is TRUE?
A. Chris has the absolute advantage in Mugs and the absolute
advantage in Hats.
B. Abe has the comparative advantage over everyone in Hats.
C. Abe has the comparative advantage over everyone in Mugs.
D. Chris has the comparative advantage over Dave in Hats.
E. Betty has the comparative advantage over Abe in Mugs.
Mugs Hats
30
10
Abe
20
30
Betty
40
40
Chris
15
20
Dave
Price
($/cup)
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
$4.00
$4.50
A.
B.
C.
D.
E.
-1
-2
-5,000
-0.0002
-2,500
Quantity
Demanded
(cups)
400
350
300
250
200
150
100
50
0
Quantity
Supplied
(cups)
25
50
75
100
125
150
175
200
225
Price
($/Pizza)
$25
$35
$45
$55
$65
$75
$85
$95
$105
Quantity
Demanded
(Pizza)
300
240
200
180
140
110
70
30
0
Quantity
Supplied
(Pizza)
0
10
40
80
140
160
190
210
240
10. Mary knows she faces a linear and downward sloping demand
curve for pottery she makes. She wishes to maximize the revenue
she makes from selling her pottery at the Ithaca Farmers Market.
She correctly estimates that the own-price elasticity of demand for
her pottery is currently -1.2. She is thinking about raising her
prices by 1%. She asks for your advice. If you are correct, you tell
her,
A. Sorry, you have not given me enough information to know
how to help you.
B. Yes, increasing your price by 1% from the current price will
increase your revenue.
C. Look, youre thinking about this incorrectly. In order to
increase revenues, you must first focus on costs.
D. Look, youre already maximizing revenue so do not change a
thing.
E. No, decrease your price because then you will sell more and
your revenues will increase!
11. Three buyers are in the market willing to pay the following for
tickets to the first hockey game of the winter. Suppose the
following marginal-willingness-to-pay figures: Odies=$1,000,
Rhyss=$550 and Bryns=$890. If the current market price is
$650, what is the total consumers surplus over these three people
in this market situation?
A.
B.
C.
D.
E.
$590
$490
$350
-$590
$615
13. You work at a fruit stand that sells apples, oranges and grapes.
The unit of measurement is pounds. You track the sales for three
weeks along with the corresponding prices. Assume nothing else
is changing in the markets aside from what you see in the chart.
From only this data, which one of the following is TRUE?
Week 1
Week 2
Week 3
Quantity
demanded
of Apples
20
40
60
Price of
Apples
Price of
Oranges
Price of
Grapes
$8
$4
$8
$2
$2
$2
$1
$1
$5
15. Suppose a per-unit tax has just been placed on the market for
carbonated soft drinks (also known as soda or pop). Demand and
supply are typically shaped in this market. Which one of the
following statements is TRUE?
A. The dead weight loss from the soda tax will be zero since the
sum of lost producers surplus and lost consumers surplus will
go to the government as revenue.
B. If we collect the tax revenue from suppliers there will be no
dead weight loss.
C. If we collect the tax revenue from the suppliers there will be no
loss of consumers surplus due to the tax.
D. Dead weight loss will equal the sum of lost consumers and
lost producers surplus.
E. None of the above are true.
1
1+2+3+4
2+3+4
3+4+5+6
Cannot be determined from the
information given.
e1_1110_f2014
Part II: Make sure you read and do ALL parts of each question. Show as much work as
possible. TRY to get started on every question. Show us something. Write legibly and
remember to label all graphs and axes in diagrams.
1. Suppose there are 80,000 seats available for sale for the BARCLAYS ATP WORLD TOUR
FINALS in The O2 Arena, LONDON in November. Since the number of seats in the arena can't
easily be expanded at short notice, the supply curve for tickets is characterized by perfect inelasticity.
Assume the market for tickets is perfectly competitive and that all 80,000 seats are in circulation.
The demand function for tickets is best characterized by: PD=1,000- (Q/128)
a. Carefully graph and label the supply and demand curves. Please indicate values at endpoints.
b. Find the equilibrium quantity (Q*) and price (P*) values and indicate them on your graph.
c. What is the value of consumers' surplus at the equilibrium? Illustrate consumers' surplus on your
graph. Do exactly the same for producers' surplus.
d. Suppose there is an exogenous decrease in market supply. Describe one scenario that would
result in this happening and suggest a reformulation of the model's equation or equations that
would plausibly represent this exogenous event.
e. Using the original supply and demand curves, suppose the government imposes a price floor of
$500 on this market. Assume no black market or after-market activity. That is to say if there is a
shortage or surplus created by the policy it just sits there, untraded. Would this price floor be
binding, explain? What quantity of tickets will actually be traded in this regulated market?
Illustrate on your graph.
f. Compare and contrast consumers, producers and net social surplus before and after the price
floor. Either show on your graph with comment OR calculate the values and comment.
ANSWERS
ANSWERS
2. Angelina and Brad both produce movies and TV interviews with their time. The time input is
measured in person-hours, movies are measured in units and TV interviews are measured in number
of shows. The table shows time requirements to produce a movie and TV interviews by Angelina
and Brad. (It is assumed that the time requirements per movie or TV interview remain the same
regardless of the total time spent on the production of each). Both Angelina and Brad have 100 hours
of time available, which can be allocated between the two activities.
FOR ALL GRAPHS PLEASE PUT MOVIES ON THE VERTICAL AND INTERVIEWS ON
THE HORIZONTAL.
Angelina Brad
1 movie
20 hours 25 hours
1 TV interview 15 hours 10 hours
a. Graph the production possibilities frontier (PPF) for both Angelina and Brad (separately) clearly
labeling the axes. Indicate the numerical value of endpoints. (Note: The time requirements
remain constant irrespective of the quantity produced.)
b. What is Angelina's marginal opportunity cost of producing an extra movie? What is Brad's?
c. What is Angelina's marginal opportunity cost of giving an extra TV interview? And for Brad?
d. Who has the comparative advantage in interviews? Defend your position.
e. Diagrammatically illustrate the Joint PPF for Brad and Angelina assuming they allocate time
based on the principle of comparative advantage. Indicate the numerical value of endpoints.
f. If the total number of movies is 7 and the total number of interviews is 5, who is doing how many
of each?
ANSWERS
ANSWERS
13 B
Use weeks 1 and 2 to get (-20/30)/(4/6)=-1 and weeks 1 and 3 to get (40/80)/(4/6)=0.75. Cant use weeks 2 and 3 (choice
D) since both apple price AND grape price changes.
14 E
The cross price elasticity would be: negative 4.4 indicating that peanut butter and bread are complements in
consumption.
15 E.
There is something flawed in A-D, one way or the other.
16 C
The area (1) represents the consumer surplus in the original case (Q0,P0).The area (1 + 2 + 3 + 4) represents the
consumer surplus in the new case (Q1,P1). So, the change in consumer surplus is shown by the area (2 + 3 + 4). The area
(3 + 4 + 5 + 6) doesnt represent anything related to consumer surplus.