DCU EF113 Introduction to Microeconomics Past Paper 2018/2019 PDF

SEMESTER 2 EXAMINATIONS 2018/2019 MODULE: EF113 - Introduction to Microeconomics PROGRAMME(S): BS Bachelor of Business Studies AF BA in Accounting and Finance EPL BA in Economics, Politics and Law INTB Bachelor Business Studies International MINT...

SEMESTER 2 EXAMINATIONS 2018/2019 MODULE: EF113 - Introduction to Microeconomics PROGRAMME(S): BS Bachelor of Business Studies AF BA in Accounting and Finance EPL BA in Economics, Politics and Law INTB Bachelor Business Studies International MINT BSc Marketing, Innovation & Technology AMPS BSc in Aviation Management ACM BSc in Actuarial Mathematics EBF BA in Global Business (France) EBG BA in Global Business (Germany) EBS BA in Global Business (Spain) CAFM Common Entry, Actuarial, Financial Maths EBT BA in Global Business (USA) EBC BA in Global Business (Canada) YEAR OF STUDY: 1 EXAMINER(S): Majella Brereton (Internal) Ms. Diane Cadden (External) External Prof. Eoin Reeves (External) External TIME ALLOWED: 2 Hours INSTRUCTIONS: Answer all 20 multiple-choice questions (MCQs) from question 1 to question 20. Fill in your answers on the computer readable MCQ answer sheet provided. Negative marking applies for incorrect answers. A correct answer gets 2.5 marks. An incorrect answer gets minus 0.6 marks. Where no answer is provided the mark is zero. Question 1 to 20 account for 50% of the marks for this exam paper and each question is of equal value. Answer 2 questions from questions 21 to 24 inclusive. Questions 21 to 24 carry equal marks, each question accounts for 25% of the total marks for this paper. Make sure you hand up the computer readable MCQ answer sheet at the end of the exam. Make sure you put your exam number on the computer readable sheet. EF113 – Introduction to Microeconomics Semester 2 Examinations 2018/2019 Page 1 of 10 PLEASE DO NOT TURN OVER THIS PAGE UNTIL YOU ARE INSTRUCTED TO DO SO. The use of programmable or text storing calculators is expressly forbidden. Please note that where a candidate answers more than the required number of questions, the examiner will mark all questions attempted and then select the highest scoring ones. Requirements for this paper: 1. Graph Paper 2. Faculty/School MCQ Sheets calculator EF113 – Introduction to Microeconomics Semester 2 Examinations 2018/2019 Page 2 of 10 Answer all the questions from number 1 to 20 by marking the computer readable answer sheet. Select only one answer per question. Negative marking applies. [TOTAL MARKS: 50] 1. If scarcity exists then it implies that a. prices are high b. incomes are low c. choices must be made d. there are no free goods 2. Assume you receive a gift of €100 for your birthday. If you choose to use the €100 to go to a concert, your opportunity cost of going to the concert is a. nothing, because the money was a gift b. €100 c. €100 plus the value of your time spent at the concert d. €100 plus the value of your time spent at the concert, plus the cost of the meal you purchased at the concert 3. When the prevailing price is above the price where supply intersects demand a. price falls because there is a shortage, so producers cut prices to try to attract buyers b. price falls because there is a surplus, so producers cut prices to try to attract buyers c. Price rises because there is a surplus, so buyers bid up the price d. Price rises because there is a shortage, so buyers bid up the price EF113 – Introduction to Microeconomics Semester 2 Examinations 2018/2019 Page 3 of 10 4. Which of the following would cause the demand curve for an inferior good to shift to the right a. a fall in the price of substitutes b. a fall in the price of raw materials used to make the good c. a fall in supply d. a fall in income 5. If good B is a substitute for good A, and the price of good B increases, then a. the price of good A will decrease b. the quantity demanded of good A will decrease c. the demand for good A will increase d. the quantity demanded of good B will increase 6. The government is introducing 'smart' electricity meters to each household in Ireland on a phased rollout basis. What are they hoping the 'smart meters' will do? a. increase price elasticity of demand b. increase price elasticity of supply c. decrease price elasticity of demand d. decrease price elasticity of supply 7. Assume income elasticity of demand for good A is positive. Which of the following statements are true a. good A is a normal good b. good A is an inferior good c. good A is a compliment d. good A is a substitute EF113 – Introduction to Microeconomics Semester 2 Examinations 2018/2019 Page 4 of 10 8. When demand is elastic and supply is inelastic a. sellers bear most of the economic burden of a tax b. buyers bear most of the economic burden of a tax c. the tax burden is borne equally by sellers and buyer d. the tax burden falls on whoever bears the legal burden of the tax 9. Producer surplus is the area a. below the demand curve and above price b. above the supply curve and below price c. where the supply curve and demand curve intersect d. below the demand curve and above the supply curve 10. Which of the following would likely cause the greatest deadweight loss? a. a tax on chewing gum b. a tax on cigarettes c. a tax on petrol d. a tax on a Ferrari car 11. If the legal minimum wage is set above the market clearing wage then a. a price floor exists and the labour market experiences unemployment b. a price floor exists and the labour market experiences shortages c. a price ceiling exists and the labour market experiences unemployment d. a price ceiling exists and the labour market experiences shortages EF113 – Introduction to Microeconomics Semester 2 Examinations 2018/2019 Page 5 of 10 12. The purpose of competition law is to a. regulate the prices charged by a monopoly b. increase merger activity that helps to generate synergies that reduce costs & raise efficiency c. create public ownership of natural monopolies d. influence structure, conduct and performance of firms 13. Which of the following firms has the least incentive to advertise? a. a manufacturer of breakfast cereal b. a wholesaler of crude oil c. a restaurant d. a manufacturer of home heating and air conditioning units 14. If oligopolists successfully form a cartel, the market outcome is a. the same as if it were served by competitive firms b. efficient because cooperation improves efficiency c. the same as if it were served by a monopoly d. known as Nash equilibrium 15. Tradable pollution permits a. reduce the incentive for technological innovations to further reduce pollution b. set the price of pollution c. set the quantity of pollution d. determine the demand for pollution EF113 – Introduction to Microeconomics Semester 2 Examinations 2018/2019 Page 6 of 10 16. To internalize a negative externality, an appropriate public policy response would be to a. have the government take over the production of the good causing the externality b. ban the production of all goods creating negative externalities c. tax the good d. subsidize the good 17. John's car is in need of repair so John decides to sell it to avoid the repair bill. Unaware of the problem, Suzanne buys the car. This is an example of a. hidden actions b. adverse selection c. efficiency wages d. moral hazard 18. According to the Coase theorem, private parties can solve the problem of externalities if a. there are no transaction costs b. the affected parties have equal power in the negotiations c. there are a large number of affected parties d. the government requires them to negotiate with each other 19. When sellers have more information about products than buyers do, we would expect a. sellers to get higher prices for their goods than they could otherwise b. buyers to pay lower prices for goods than they would otherwise c. high-quality goods to drive low-quality goods out of the market d. low-quality goods to drive high-quality goods out of the market EF113 – Introduction to Microeconomics Semester 2 Examinations 2018/2019 Page 7 of 10 20. The provision of a fireworks display is a. excludable and rival b. excludable and non-rival c. non-excludable and non-rival d. non-excludable and rival EF113 – Introduction to Microeconomics Semester 2 Examinations 2018/2019 Page 8 of 10  Answer 2 questions from the following 4 questions. QUESTION 21 [TOTAL MARKS: 50] Assume the market for flights from Dublin to Paris is in equilibrium with a price of €100 per return flight. Discuss with the aid of graphs the factors that influence and change the equilibrium price. In your answer, provide examples relevant to the market for airline tickets. [End of Question 21] QUESTION 22 [TOTAL MARKS: 50] Discuss price elasticity of supply and price elasticity of demand with the aid of graphs. In your answer, describe the determinants of both types of elasticity. Suggest real world applications for both types of elasticity. [End of Question2] EF113 – Introduction to Microeconomics Semester 2 Examinations 2018/2019 Page 9 of 10 QUESTION 23 [TOTAL MARKS: 50] “Monopoly and oligopoly market structures exploit consumers”. Discuss this statement. In your answer explain the role of government regulation and competition policy in these markets. [End of Question23] QUESTION 24 [TOTAL MARKS: 50] “There are many imperfections in the free market that give rise to market failure”. Discuss this statement with reference to externalities and public goods. In your answer, explain why government intervention may be necessary. Provide examples to support your answer. [End of Question 24] [END OF EXAM] EF113 – Introduction to Microeconomics Semester 2 Examinations 2018/2019 Page 10 of 10