Tenta 3

• The EKN112 Microeconomics exam is worth 100 points; a failing grade is achieved with below 50 points.

Exam Structure

• The first 10 questions are multiple choice, each worth 2 points. Only one option is correct for each. -The next four questions are multiple choice, each worth 5 points. One or more options may be correct and all correct options must be chosen to get the points.
• Remaining questions vary in scope; points awarded per subquestion.
• Thoroughly motivate answers where possible, as motivation is a large part of the evaluation
• Carefully read all questions and instructions.

Allowed Aids

• A web-based calculator is provided within the exam system. External calculators are not permitted.
• Non-Swedish native speakers may use a dictionary.

Kurs: EKN102 Mikroekonomi

• Tentan ger 100 poäng, under 50 poäng ges betyget U (Underkänd).
• De första tio frågorna är flervalsfrågor som ger 2 poäng per fråga för rätt svar och endast ett svarsalternativ kan vara rätt.
• De efterföljande fyra frågorna är flervalsfrågor som ger 5 poäng per fråga och där ett eller flera svarsalternativ kan vara rätt.
• Poäng erhålls endast om frågan är helt korrekt besvarad, dvs alla korrekta svarsalternativ har valts och inga felaktiga svarsalternativ har valts. -Var utförlig och tydlig i dina motiveringar, förklara vad du gör och varför du gör det.

Tips Inför Tentamen

• Läs igenom hela tentamen innan du börjar för att få en uppfattning om omfattningen och hur du bör fördela tiden.
• En webbaserad miniräknare finns som en resurs kopplad till tentamen (öppnas med knapp längst ned på sidan). Annan miniräknare får ej användas.
• Studenter med ett annat modersmål än svenska får använda ett lexikon.

Part 1

• Part 1 of the exam contains 10 questions, each with only one correct answer. Each correct answer yields 2 points.

Producer Behavior in Competitive Market

• If a producer in perfect competition has a marginal revenue of 150, marginal cost of 125, and average total costs of 110, they should increase quantity.

Isoquants

• All points on an isoquant illustrate the same quantity of output (Q) from the production process.

Price Discrimination

• Market power and prevention of resale are essential for successful price discrimination.

Market Power

• A producer with "market power" faces a downward sloping demand curve.

Labor Unions

• If all workers in a labor market unionize, the wage level will increase and the quantity of labor employed will decrease.

Price Elasticity

• If the price elasticity is between -1 and 0, the demand is inelastic.

Taxes

• The area idal in the graph represents the total tax the seller has to pay.

Indifference Curve Slopes

• A constant slope in an indifference curve indicates that the two goods are perfect substitutes.

Demand

• Given the demand curve drawn in the figure above, when a price goes up from 30 there are approximately 4 units being made.

Elasticity

• If the price elasticity of demand is -2, a price increase leads to a reduction in consumer expenditures for this good

Part 2

• Part 2 of the exam contains four questions where one or more options may be correct.
• Points are only awarded if all correct options have been chosen and no incorrect options have been chosen

Consultancy Firm Scenario

• A consultancy charging €150/hour with a labor market wage of €100/hour is a price taker in the labor market.
• If the wage is lower than the price per unit, the consultancy should increase production by increasing labor.
• If the wage exceeds €150, the consultancy will hire no workers, resulting in zero demanded labor.
• Employing 100 units of labor currently means too much labor is employed, and labor should be reduced.
• Since the amount of labour can be varied, we are looking at production in the long run.

Petrol Stations

• The Nash Equilibrium happens when both companies decide to reduce price.

Statements:

• The assumption of indifference curves being convex to the origin asserts that consumers prefer a variety of goods.

Environmental Economics:

• A public good in an unregulated market is likely lower than the socially optimal level.
• With an emission tax, firms will have the same marginal abatement cost in equilibrium.
• With tradeable emission permits, high marginal abatement cost firms will sell to firms with low costs.
• An emission tax and tradeable permits lead to the same emission level.

Exam Part 3

• Part 3 involves questions of varying scope; carefully adhere to formatting instructions for answers.
• Clearly show your reasoning and motivation for each answer.

Demand and Supply Functions

• Equilibrium is reached when the quantity is 100. Vid vilken kvantitet nås equilibrium?
• When the Price is 1200, Price elasticity is - 1.5. Vid vilket pris är priselasticiteten - 1.5?
• At a price ceiling of 1000, an excess demand of 150 results. När ett pristak på 1000 införs blir efterfrågan 150.
• Deadweight loss of a tax set to 300 per unit sold is 3000. Vid en dödviktsförlust av 300 är förslusten 3000.

Car valuation

• Buyers will pay 15200, for a car if they do not know the quality and buyers believes the car quality is 60%.

Incomplete table

FC = 15 VC(1) = 3 AVC(3) = 4 AFC(3) = 5 ATC(2) = 11