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Econ 1110 - INTRODUCTORY MICROECONOMICSMakeup PRELIM #1 – Wissink - S2018 - March 7________________________________________ ____________________________________Your LAST (FAMILY) NAME Your First (given) nameYour NetId:_________________ Your Student Number:________________________________NO QUESTIONS CAN BE ASKED DURING THE EXAM ABOUT EXAM CONTENT: If there is something troubling you about a question, write us a note on the exam somewhere and we will deal with it as we are grading. If you need a pencil or scratch paper, or some other supply that we might have, raise your hand and wait for the proctor to come to you. RESTROOM USE: If you absolutely need to use the restroom raise your hand and wait for the proctor. Only one person can be out of the examination room at a time, and the proctor will hold onto your exam papers while you are out at the restroom.NO CELL PHONES, IPODS OR DEVICES WITH CALCULATOR “APPS” or large screens.NO GRAPHING CALCULATORS.NO BOOKS. NO NOTES. NO HELP SHEETS.NO TALKING TO EACH OTHER.There are two sections in this exam. Answer all questions.Part I: 15 multiple choice/fill in the blank questions @ 3.33 points eachPart II: 2 problems @ 25 points eachTotal Points = 100, Total Time = 90 minutes.Circle the TA’s name for the section you regularly attend (that is, where you will pick up your prelim):One more time, please…_____________________________________ _________________________________Your LAST (FAMILY) NAME Your First (given) nameYour NetId:_________________ Your Student Number:________________________________Max PointsYour ScorePart I50 pointsPart IIQ125 pointsQ125 points left0Part I: Multiple Choice and Fill In The Blank Questions. Do them ALL.Circle the letter for your answer or fill in the answer in the blank provided.020000Part I: Multiple Choice and Fill In The Blank Questions. Do them ALL.Circle the letter for your answer or fill in the answer in the blank provided.. From the list below, which one of the questions would be considered a normative question?Should the government provide health insurance for any individual who cannot afford it?What will happen to the speed with which new drugs are developed if the government places price controls on prescription drugs?Why is the infant mortality rate higher in the United States than in most other developed countries?Will physicians’ incomes increase or decrease if national health insurance is instituted in the United States? Will supporting milk prices increase farmers’ income?PersonSongscomposed/weekTaleswritten/weekKanye510Elvis85Elton33. Refer to the table.? Kanye, Elvis, and Elton can either compose songs or write tales. The table shows the maximum number of songs and tales that can be written by each of these three writers (or any linear combination). If they want to compose 8 songs and 13 tales efficiently each week, how should they specialize in production? None of the writers specialize.Elvis and Elton specialize in songs and Kanye specializes in tales.Elton and Kanye specialize in tales and Elvis specializes in songs.Elvis and Kanye specialize in songs and Elton specializes in tales.Elvis and Kanye specialize in tales and Elton specializes in songs.. Cersei and Jaime rule a city and have just had a baby. It takes Cersei 25 minutes to feed a baby and 50 minutes to hear a petition. Jaime takes 15 minutes to feed a baby and 45 minutes to hear a petition. Which one of the following statements is true?Jaime has a comparative advantage in feeding a baby because Jaime can do it faster than Cersei.Jaime has a comparative advantage in hearing petitions relative to Cersei.Jaime has a comparative advantage in feeding the baby relative to Cersei.They can't gain from specialization.Cersei has a comparative advantage in feeding the baby relative to Jaime.. Which one of the following will increase the demand for soda in the local soda market? Soda is an inferior good.An increase in income of the town.A decrease in the price of corn syrup, an input.A decrease in the price of orange juice, a substitute in consumption.A decrease is the price of French fries, a complement in consumption.A health campaign discouraging the consumption of sugary drinks like soda.. Suppose that the weekly supply function for pumpkin cookies is typically shaped and is written as follows: QS = 2,000 – 4A + 3B – 32CWhich one of the following statements is most likely to be true?Variable B could be the price of pumpkins used to make the cookies.Variable B could be the price of milk that people drink along with their cookies.Variable B could be the price of pumpkin cookies.Variable A could be the number of firms making pumpkin cookies.Variable A could be an indicator of technological sophistication.. Beckham owns a stadium with capacity of 600 seats. He knows that his inverse demand curve is PD = 70 – (1/60)Q. What is the equilibrium market price for his stadium in order to sell out the seats?$50$55$60$65$73.3. Consider the market for energy drinks (like Gatorade) in California. The Surgeon General gives several speeches on the health risks and consequences of dehydration. And people take notice. A sunny summer encourages Californians to exercise more. At the same time a drought in California raises the price of water, an important ingredient for making energy drinks. Which one of the following statements is correct concerning the energy drink market?Both equilibrium price and equilibrium quantity must increase as a consequence of these events.Both equilibrium price and equilibrium quantity must decrease as a consequence of these events.Equilibrium price must increase and equilibrium quantity must decrease as a consequence of these events.Equilibrium price must increase but we don’t know what will happen to equilibrium quantity as a consequence of these events.Equilibrium quantity must increase but we don’t know what will happen to equilibrium price as a consequence of these events.. Suppose that a competitive market exists in the U.S. for both domestically made sugar and Brazilian made sugar. Suppose the U.S. government slaps a binding import quantity quota on Brazilian made sugar sold in the U.S. Which one of the following is the best prediction of the consequence of the quota?The market price of U.S. made sugar falls and the market price of Brazilian made sugar rises.Only the market price for Brazilian made sugar rises.The quantity exchanged in both the Brazilian made sugar market and the U.S. made sugar market decreases.Only the market price of U.S. made sugar increases.The equilibrium price of both Brazilian made sugar and U.S. made sugar increase.304800011430000. Consider the graph. Suppose it illustrates the situation after the government has put a binding price floor into law. Which one of the following statements is true?The price floor could be L.There will be a shortage of N-M units.M units will be traded.There will be a surplus of K-C units.The regulated equilibrium occurs at point F.. The demand curve for traditional vinyl records is given by QD = 90 – P and the supply curve is given by QS = 2P. At the market equilibrium, use the POINT formula to calculate the exact own price elasticity of demand at the market equilibrium.After taking the absolute value, the own price elasticity of demand is: ____________32766000. Which of the areas in the figure represents the change in producers’ surplus caused by the given transaction tax?Areas b + g + dAreas b + gAreas b + g + d + i + f Areas a + b + h + gCannot be determinedfrom the information given.PD=MB QuantityDemandedPS=MCQuantitySupplied$221$21$182$42$153$63$124$84$105$105$86$126$67$147$48$168$29$189$110$2010. For this question, use the table showing supply and demand. What is the value of consumers’ surplus at the market equilibrium?Ans:. Suppose that the quantity demanded for turkey at Ithaca’s local butcher increased from 9 to 11 pounds per month when the price fell from $3.00 per pound to $2.00 per pound. The own price elasticity of demand for turkey, using the (midpoint) arc formula is:A. -0.67B. -2.0C. -1.5.D. -0.5E. not defined left1132000. Consider the regional market for pairs of mittens on the right. Suppose that the government levies a tax of $2 per pair on mittens traded. Which one of the following statements about the post-tax equilibrium is true?More mittens will be traded.No one bears the economic price incidence of the tax.Demanders bear the complete economic price incidence of the tax.If demanders send the tax revenue to the government then they will bear the economic price incidence of the tax, otherwise suppliers will.None of the above are true.45143051389740. Consider the national market for units of college education (measured by credit hours) on the right. Suppose that the government grants a subsidy of $100 per credit hour to demanders in this market. Which one of the following statements about the post-subsidy equilibrium is true?The final demand price PD is now higher.The government will collect several dollars in revenue from college education.The value of net social surplus in now higher than it was before.More credit hours will be traded and both demanders and suppliers will be better off.More credit hours will be traded but only demanders will be better off.left0Part 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.020000Part 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. Consider a week. SEQ CHAPTER \h \r 1Ben and Stephen are the only producers/consumers in a small sports loving economy. Ben and Stephen produce and consume only two things: Olympic logo Tshirts and pins.Given 60 hours of work in a week, Ben can produce a maximum of 3 Tshirts or 15 pins, or any combination along a straight line PPF between the two.Given 60 hours of work in a week, Stephen can produce a maximum of 5 Tshirts or 20 pins, or any combination along a straight line PPF between the two.Fill in the missing numbers in the table below:Hours Required for One Unit of OutputTshirtsPinsBen20 hours4 hoursStephen______ hours______ hoursPutting TSHIRTS ON THE HORIZONTAL and PINS ON THE VERTICAL graph Ben’s and Stephen’s individual production possibility frontiers. Identify Ben’s and Stephen’s marginal opportunity costs for making Tshirts and for making pins.Who has the absolute advantage in Tshirt production? Briefly explain why.Who has the comparative advantage in Tshirt production? Briefly explain why.Putting TSHIRTS ON THE HORIZONTAL and PINS ON THE VERTICAL illustrate the efficient combined production possibility frontier. For full credit make sure to label numerical values at endpoints on the joint PPF and at any kink points on the joint PPF. Also label the steepness of any segments on your joint PPF.If Ben and Stephen specialize and trade with each other, what would be the bounds of an “international” exchange rate between Tshirts and Pins?ANSWERS2. Suppose that the following equations describe the expected demand and supply curves for hours of labor in Ithaca in 2018 (where Q is quantity of hours and W is the wage per hour). DEMAND: QD = 100 – 1W SUPPLY: QS = -20 + 2WWrite the equations for the inverse demand curve and the inverse supply curve (that is the equations for what we actually graph as demand and supply).Graph the demand and supply curves and determine the equilibrium wage and quantity of hours in the market. Show on your graph. Label points and values.Suppose the mayor decides to use his power to put a binding minimum wage into effect. Suggest a value for the minimum wage that would make it binding.Using your graph from (b) and equations given above and YOUR minimum wage, thoroughly analyze the economic consequences of the mayor’s policy directive on demanders (employers) and suppliers (workers). Using appropriate surplus measures, be sure to identify (and show on your graph) who benefits and who does not as a result of the policy.Is there any dead-weight-loss as a consequence of this policy? Show on your graph and determine its value, if any.ANSWERSANSWERS ................
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