V
LOUISIANA STATE UNIVERSITY
ECONOMICS 2030
SPRING 2010: EXAM 2
SIGNATURE:
*
NAME:
LAB MEETING DAY: (^WEDNESDAY FRIDAY
LAB MEETING TIME: 11:40 , 12:40
LAB INSTRUCTOR: MR EMRE UNLU MS TONG ZENG
VERSION J
INSTRUCTIONS
1. Read these instructions carefully and DO NOT TURN THIS PAGE until you are told that you
may begin the examination. Fill in the information in the blank spaces above, signing your name where
it says "SIGNATURE" and printing your name where it says "NAME." In addition, CIRCLE your lab
meeting day, time, and lab instructor's name.
2. The only materials you may use on the exam are a pencil, an eraser, a highlighter, and a
small scantron (Form no. 882-E). You may NOT use calculators, other electronic devices, scrap paper,
or any other materials. Please place all unusable items in a closable receptacle, close the receptacle,
and place that under your seat. All electronic devices must be turned off for the duration of the exam.
3. On your scantron please print the following information: Name, Lab Instructor's Name,
Lab Section Number, and Test Version Letter.
4. Each question is worth 0.80 points. Each question has only one correct answer: MARK your
choice clearly on your scantron. Any question on which a single answer is not marked clearly will be
considered incorrect.
5. To sit for the exam you must have a valid LSU STUDENT ID card. Please place it on your desk
where it can be seen and leave it there for the duration of the exarn.
6. Once the instructor begins to distribute the exam you may not talk. If you have a question,
raise your hand. The question will be answered by the instructor.
7. You have 50 minutes in which to complete the exam. If you finish early, please remain
seated and raise your hand. An instructor will collect your test, after which you may leave the room.
Please do so quietly.
8. By signing this cover sheet you acknowledge that you have read, understood, and agreed
to the conditions enumerated in this list of instructions. Violations of the exam instructions will
be treated as a violation of the Code of Student Conduct and dealt with in accordance with the
Code.
, v;
Suppose the price elasticity of demand for a good is 2.1 and the price elasticity of supply for
the good is 0.9. Suppose further than an excise tax of $10.00-per unit is placed on the
good. Everything else held constant, the j^icejsejlers receive for the good after the tax is
levied will be the price they received prior to the tax.
A) the same as
B) $1.00 lower than
3 r;70%)
CJ_^ $2.10 lower than
" $7.00 lower than ,7
$9.00 lower than 3 10.60
7 00
.,/
Suppose that mac and cheese is an inferior
enor good and national income is increasing.
'0
$700
Everything else held constant, consumer surplus in the market for mac and cheese will
and producer surplus will .
ambiguous; decrease i i Pvice-a
decrease; be ambiguous
increase; increase
^increase; be ambiguous
Ef be ambiguous; increase : SOlCf {pf - fVDfl :/•'. .
LA '
If the price a profit-maximizing firm charges in a perfectly competitive market is less than its
average total cost in the , then the firm is earning an economic profit <:" zero,
everything else held constant.
A)—long run; equal to
BJ") short run; less than
C) long run;-less than Arc
D) long run; greater than
E) short run; greater than :i
4. Suppose you calculate that the total cost of producing 74 units of output is $370 for your
perfectlyCompetitive firm. If the total cost of producing 75 units of output is $375 and the
market price for your good is $5 per unit, your firm .
[)is operating at its long-run equilibrium when it produces 75 units. $^> ST. M (_
will earn a positive economic profit by producing 75 units,
should shut down immediately,
should decrease output below 74 units.
5. Suppose Michelle's Mitten Mill operates in a perfectly competitive market and is producing
its profit-maximizing level of output. Suppose further that at this level of production its
average total cost of producing mittens is $18, average variable cost is $16, and marginal
cost is $14. Michelle should
A) increase production since it will increase her economic profit.
B) continue to produce since she is covering some of her fixed costs. ATC
C) decrease production since it will increase her economic profit.
(J5j[) shutdown immediately.
.
E) continue to produce since she is earning a positive economic profit.
p <r
Version J Page 1
LOUISIANA STATE UNIVERSITY
ECONOMICS 2030
SPRING 2010: EXAM 2
SIGNATURE:
*
NAME:
LAB MEETING DAY: (^WEDNESDAY FRIDAY
LAB MEETING TIME: 11:40 , 12:40
LAB INSTRUCTOR: MR EMRE UNLU MS TONG ZENG
VERSION J
INSTRUCTIONS
1. Read these instructions carefully and DO NOT TURN THIS PAGE until you are told that you
may begin the examination. Fill in the information in the blank spaces above, signing your name where
it says "SIGNATURE" and printing your name where it says "NAME." In addition, CIRCLE your lab
meeting day, time, and lab instructor's name.
2. The only materials you may use on the exam are a pencil, an eraser, a highlighter, and a
small scantron (Form no. 882-E). You may NOT use calculators, other electronic devices, scrap paper,
or any other materials. Please place all unusable items in a closable receptacle, close the receptacle,
and place that under your seat. All electronic devices must be turned off for the duration of the exam.
3. On your scantron please print the following information: Name, Lab Instructor's Name,
Lab Section Number, and Test Version Letter.
4. Each question is worth 0.80 points. Each question has only one correct answer: MARK your
choice clearly on your scantron. Any question on which a single answer is not marked clearly will be
considered incorrect.
5. To sit for the exam you must have a valid LSU STUDENT ID card. Please place it on your desk
where it can be seen and leave it there for the duration of the exarn.
6. Once the instructor begins to distribute the exam you may not talk. If you have a question,
raise your hand. The question will be answered by the instructor.
7. You have 50 minutes in which to complete the exam. If you finish early, please remain
seated and raise your hand. An instructor will collect your test, after which you may leave the room.
Please do so quietly.
8. By signing this cover sheet you acknowledge that you have read, understood, and agreed
to the conditions enumerated in this list of instructions. Violations of the exam instructions will
be treated as a violation of the Code of Student Conduct and dealt with in accordance with the
Code.
, v;
Suppose the price elasticity of demand for a good is 2.1 and the price elasticity of supply for
the good is 0.9. Suppose further than an excise tax of $10.00-per unit is placed on the
good. Everything else held constant, the j^icejsejlers receive for the good after the tax is
levied will be the price they received prior to the tax.
A) the same as
B) $1.00 lower than
3 r;70%)
CJ_^ $2.10 lower than
" $7.00 lower than ,7
$9.00 lower than 3 10.60
7 00
.,/
Suppose that mac and cheese is an inferior
enor good and national income is increasing.
'0
$700
Everything else held constant, consumer surplus in the market for mac and cheese will
and producer surplus will .
ambiguous; decrease i i Pvice-a
decrease; be ambiguous
increase; increase
^increase; be ambiguous
Ef be ambiguous; increase : SOlCf {pf - fVDfl :/•'. .
LA '
If the price a profit-maximizing firm charges in a perfectly competitive market is less than its
average total cost in the , then the firm is earning an economic profit <:" zero,
everything else held constant.
A)—long run; equal to
BJ") short run; less than
C) long run;-less than Arc
D) long run; greater than
E) short run; greater than :i
4. Suppose you calculate that the total cost of producing 74 units of output is $370 for your
perfectlyCompetitive firm. If the total cost of producing 75 units of output is $375 and the
market price for your good is $5 per unit, your firm .
[)is operating at its long-run equilibrium when it produces 75 units. $^> ST. M (_
will earn a positive economic profit by producing 75 units,
should shut down immediately,
should decrease output below 74 units.
5. Suppose Michelle's Mitten Mill operates in a perfectly competitive market and is producing
its profit-maximizing level of output. Suppose further that at this level of production its
average total cost of producing mittens is $18, average variable cost is $16, and marginal
cost is $14. Michelle should
A) increase production since it will increase her economic profit.
B) continue to produce since she is covering some of her fixed costs. ATC
C) decrease production since it will increase her economic profit.
(J5j[) shutdown immediately.
.
E) continue to produce since she is earning a positive economic profit.
p <r
Version J Page 1
