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(ECON214)[2009](s)midterm~752^_10239.pdf
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Econ 214
Spring, 2009
Midterm Exam.
Instructor: Yan YU







Name:__________________

I.D. number:_____________________

Total Score: ________________________






General Instructions:

This is a close-book examination. You have 120 minutes. Please check if you have a total of 6 pages including this cover page. You may use calculators.



I. Multiple choices (5 points each, 35 points total)


1. (2.3) Suppose the demand for X is given by QXd = 100 - 2PX + 4PY + 10M + 2A, where PX represents the price of good X, PY is the price of good Y, M is income and A is the amount of advertising on good X. Good X is a. An inferior good b. A normal good c. A Giffin good d. A complement

2. (3.7) Which of the following provides a measure of the overall fit of a regression? a. T-statistic b. F-statistic c. R-square
d. The F-statistic and R-square

3. (3.2) When the own price elasticity of good X is -3.5 then total revenue can be increased by a. Increasing the price b. Decreasing the quantity supplied
c. Decreasing the price d. Neither increase price, decrease price nor decrease quantity supplied

4. (2.3, 3.4, 3.5, 3.8) The management of Local Cinema has estimated the monthly demand for tickets to be lnQ = 22,328 - 0.41 lnP + 0.5 lnM - 0.33 lnA + 100 lnPvcr, where Q = quantity of tickets demanded, P = price per ticket, M = income, A = advertising outlay, and Pvcr = price of a VCR tape rental. It is known that P = $5.50, M = $9,000, A = $900, and Pvcr = $3.00. Based on the information given, which of the following statements is false? a. Advertising decreases the demand for movie tickets b. Movies are normal goods
c. Movies are complements for VCR tapes d. The advertising elasticity of demand for movie tickets is -0.33

5. (5.4) An industry consists of six firms with annual sales of $300, $500, $400, $700, $600, and $600, respectively. What is the industry's HHI? a. 1,659
b. 1,779 c. 1,839 d. 1,909





6. (2.4) Toms willingness to pay for his first movie (in a month) is $80, for the second movie is $60, for the third is $50, for the fourth is $45, for the fifth is $35. If tickets are sold at $40/movie, what is Toms buyer surplus? (Assume Tom maximizes his utility)

a. $40

b. $70

c. $235

d. $75





7. (2.7c) Figure below shows a shift of the supply curve for a product from S1 to S2 , as a result of a tax levied on the product. The tax per unit is ____ and the amount of the tax the consumers bear is _____ per unit.

a. P2 CP1; P3-P2

b. P3 CP1; P3-P2

c. P3 CP1; P2-P1

d. P3 CP2; P2-P1

e. P2 CP1; P3-P1








S2


Pricee




P3

S1







P2



D


P1







Quantity


II. Short Questions (35 points total)
1. (6.1, 3.1) If a monopolist has an own-price demand elasticity of - 0.8, is it maximizing profits? Explain.