Econ1101 Session 1, 2009 Final Exam

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THE UNIVERSITY OF NEW SOUTH WALES SCHOOL OF ECONOMICS SESSION 1, 2009

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ECONllOl MICROECONOMICS I FINAL EXAMINATION TIME ALLOWED - 2HOURS

THIS PAPER IS WORTH 65% OF THE TOTAL SUBJECT MARK

This examination paper consists of two parts - Part A and Part B Part A consists of 20 multiple choice questions each worth onc and one quarter (1.25) marks. Answer all the questions in Part A on the answer sheet provided, using pencil . only: Print your student number, name and initials in the space provided and mark

the appropriate boxes below your student number, name and initials. For each question, mark tbe appropriate response (a), (b), (c), or (d). There is only one correct response to each question in Part A.

Part B consists of four (4) essay-type questions, each worth TWENTY (20) marks.

Answer only TWO (2) questions from Part B. ANSWER EACH PART B QUESTION IN A SEPARATE EXAMINATION BOOKLET Answers to questions in Part B must be written in ink. Pencil may be used in answers to Part B for drawing, sketching or graphical work only .

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This question paper may be retained by the candidate There are 14 pages in this exam paper.

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PART A
This section is worth 25 marks Mark your answer on Answer Sheet provided

Question 1

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A monopo list estimates that at the current pnce being charged for the product, Marginal Cost is greater than Marginal Revenue and the abso lute price elasticity of demand is 1.8. To increase profit the monopolist should: a) Increase price so that price equals the maximum the consumer is willing to pay

b) Decrease price and sell more
c) Set price equal to the minimum average cost

d) Increase price and sell less

Question 2 The Coase theorem suggests that private markets may not be able to solve the

problem of externalities,
a) Unless the government becomes involved in the process b) When the number of parties is large and the bargaining costs are high c) If the...
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