Download Midterm 2

Exam 2
Ec 105
10/25/06
100 points
Note: Read chapter 5 in the green book and chapter 8 in Heilbroner. Good luck.
I.
Define or discuss four of the following (16 points):
A.
B.
C.
D.
E.
F.
G.
utility
ceteris paribus
profits
function of price
marginal utility
opportunity cost
marginal cost
H.
I.
J.
K.
L.
M.
Price Quantity Marginal Cost Per Unit
Utility
10
9
8
7
6
5
4
3
2
1
0
II.
0
1
2
3
4
5
6
7
8
9
10
4
4
4
4
4
4
4
4
4
4
Consumer's Total Utility Total Costs Consumer's
Surplus per
Surplus
Unit
5
9
4
17
3
24
2
30
1
35
0
39
-1
42
-2
44
-3
45
-4
45
Using the table above, and assuming that the market price is $4 and that $1 equal 1 util, answer the
following (24 points):
A.
B.
C.
D.
III.
9
8
7
6
5
4
3
2
1
0
law of demand
equilibrium
The Student
elasticity
post hoc ergo property hoc
institution
fallacy of composition
At what quantity does the consumer maximize consumer's surplus?
At the equilibrium quantity what is the total utility, the costs in utils, and the consumer's surplus?
How does the concept of consumer's surplus corroborate the invisible-hand doctrine?
Explain the intuition underlying the utility maximizing condition.
Choose one (20 points):
A.
Explain Marx’s concept of alienation, and how it was reflected in the movie “Roger and Me.”
B.
How does Marx explain the origin of profits? What is a cause of the tendency for the rate of profit
to fall? How are efforts to counteract declines in the rate of profit reflected in the movie “Roger
and Me.”
C.
Contrast Marx’s explanation of unemployment with that of orthodox economic theory (supply and
demand).
2
IV.
Choose one (10 points):
A.
Briefly contrast the labor theory of value with that of the subjective theory of value focusing on:
1.
the economic problem
2.
the source of value
3.
concept of society
4.
income distribution
5.
harmony of society
B.
Given the following:
Demand curve: Qd = 12 - P
Supply curve: Qs = 2P
1.
Make a schedule relating price, Qd, and Qs.
2.
What is the equilibrium price?
3.
What happens if government imposes a price of 8?
4.
What happens if government imposes a price of 2?
C.
Critically evaluate the argument that increases in military expenditures promote economic growth.
V.
Choose two of the following (22 points)
A.
Explain the prisoner's dilemma. What does the prisoner's dilemma imply for the concept of
rational choice? For the invisible hand doctrine?
B.
Explain the concept of diminishing marginal utility
C.
Identity several areas where the concept of rational choice might apply.
D.
How does the concept of equilibrium price relate to the invisible-hand doctrine?
E.
How does John Hobson link depression with war?
F.
Apply the concept of elasticity to one the policy of reducing teen smoking (use graphs).
VI.
Choose
points):
A.
B.
C.
D.
One. Show graphically and identify the non-price determinant for the change in the market (8
Show the impact on the market for SUVs of an increase in gas prices.
Show the impact on the market for automobiles owing to the development of mass transit systems.
Show the impact on the market for sushi owing to the discovery of high levels of mercury in fish.
Show the impact on the market for manufactured goods owing to moving production to China.