Solution to Midterm Exam (Fall 2009; Micro Principles)

★★★★ Solution to Midterm Exam (Int’l Business Administration, WUCL) ★★★★
Fall 2009 Instructor: 衛忠欣 (Jong-Shin Wei)
經濟學一 (Principles of Microeconomics) (07)342-6031 ext.6222
93001@mail.wtuc.edu.tw jsw12011958@gmail.com
3:30 pm ~ 5:00 pm, Nov.9, 2009 Open books/notes exam. For questions 1 to 30, choose the most appropriate one from four alternatives. Three points for each. Questions 31 and 32 are short-essay or analytical questions (10 points each).
Total: 110 points.　字典與翻譯機，限於 4:00 pm 前使用。
1. If the market demand curve of apples changes from 2P + Q = 4 to 3P + Q = 3, we say that
(A) 需求曲線向右平移；
(B) 需求曲線向下平移；
(C) 蘋果的需求增加；
(D) 蘋果的需求減少。
Ans: D.

2. [continued from question 1] Suppose that the equilibrium quantity remains unchanged, it must be the case that
(A) the price is regulated by the government;
(B) the market supply curve is vertical;
(C) the market supply curve is horizontal;
(D) it is a free good.
Ans: B.

3. 如果全國研究所的推薦甄試之口試都在同一天，報名費亦同。就機會成本的論點來看，
(A) 台清交等名校的報考人數會下降；
(B) 台清交等名校的報考人數會上升；
(C) 缺考人數會爆增；
(D) 有助於改善研究所缺額現象。
Ans: A.

4. 迎新餐會中，九位同學堅持要坐一桌，耽誤餐會流程。原因在於系學會未注意
(A) the pricing scheme;
(B) the incentive issue;
(C) the food safety concern;
(D) the income distribution issue.
Ans: B.

5. 迎新餐會中，師長桌旁邊有一桌，需要安置四位同學。就同學的機會成本來看，
(A) 應該有四位UB1男同學自動前往入座；
(B) 應該有四位UB1女同學自動前往入座；
(C) 應該是最重要的四位系學會幹部自動前往入座；
(D) 應該是抽籤決定那四位同學應前往入座。
Ans: C.

6. When the economy is in poor shape, we expect an increase in
(A) spending on traveling abroad;
(B) spending on TV commercials for on-line games;
(C) spending on clothing;
(D) spending on bars and restaurants.
Ans: B. [lectures]

7. When people grow older and get higher pay at work, we expect to see
(A) an increase in candy bars consumption;
(B) an increase in soaps and shampoos consumption;
(C) an increase in rice consumption;
(D) an increase in books purchase.
Ans: D. [lectures]

8. We call our economy a free-market economy even we do have government interventions here and there. This is mainly because that
(A) many goods are free;
(B) we do not have a military government;
(C) people are free to move, to move between jobs, and to shut down businesses;
(D) foreign currencies can be used for payment.
Ans: C. [text]

9. Which of the following cannot partially explain the law of demand in pork market?
(A) When the price of pork goes up, people tend to consume more fish;
(B) When the price of pork goes down, people feel that their purchasing power is higher;
(C) Consumers are different in their reservation prices for pork;
(D) Sellers are willing to offer some volume discount when we buy a lot of pork.
Ans: D. [text]

*10. 回想課堂討論提及的文藻週專題展覽之拋硬幣打賭實驗。Suppose that the admission charge was 5 on Monday, 6 on Tuesday, and 4 on Wednesday. As a result, there were 30 gamblers on Monday, 25 gamblers on Tuesday, and 28 gamblers on Wednesday. Again assume that no consumer showed up more than once in the exhibition. Hence,
(A) at least 55 consumers had reservation price greater than or equal to 5;
(B) at least 28 consumers had reservation price greater than or equal to 6;
(C) exactly 28 consumers had reservation price greater than or equal to 4;
(D) at least 58 consumers had reservation price greater than or equal to 5.
Ans: A. [At least 55 (= 30 + 25) consumers had reservation price greater than or equal to 5; at least 25 consumers had reservation price greater than or equal to 6; at least 83 consumers had reservation price greater than or equal to 4.]

*11. [continued from question 10] Based on the data collected on this three-day period, we can say that the demand curve of this gamble
(A) is {(25, 6), (30, 5), (28, 4)};
(B) is {(25, 6), (55, 5), (83, 4)};
(C) is {(25, 6), (58, 5), (28, 4)};
(D) is the same as the supply curve.
Ans: B.

12. [continued from question 10] Based on the data collected on this three-day period, we can say that the demand curve of this gamble
(A) satisfies the law of demand;
(B) fails to satisfy the law of demand;
(C) does not exist;
(D) is horizontal.
Ans: A. [Notice that 6 > 5 > 4 and 25 < 55 < 83.]

13. [continued from question 10] What happens if all consumers come on Monday, which is the only exhibition day?
(A) None will bet;
(B) 30 consumers will bet;
(C) 55 consumers will bet;
(D) 58 consumers will bet.
Ans: C.

14. [continued from question 10] One lesson we might learn from it (for real-world application) is
(A) 業者應希望電腦展與國際旅展只有一天的展期；
(B) 業者應希望電腦展與國際旅展有多天的展期且逐日調整商品售價；
(C) 業者應希望電腦展與國際旅展有多天的展期但不調整商品售價；
(D) 消費者應希望電腦展與國際旅展有多天的展期且逐日調整商品售價。
Ans: B. [Compare (5)(30) + (6)(25) + (4)(28) = 412 and Max{(6)(25), (5)(55), (4)(83)} = 332. Now you see how learning the principles of economics can do good to your business practice.]

15. Recall slide no.24 in lecture 4. 下列何者不是我國政府該做的？
(A) Keep imposing a ceiling price on tuition and fees;
(B) 減少對大學的補助總金額；
(C) 鼓勵大學減招；
(D) 學費管制鬆綁。
Ans: A. [Lecture 4 and Quiz One]

16. Find the most appropriate statement.
(A) Prices are determined by the cost of production;
(B) Prices are determined by consumers’ desire;
(C) Prices are determined by the market condition;
(D) Prices are determined by the money supply.
Ans: C.

17. Tom has three potential girl friends for him to pursue or chase. If he goes after Anna, the benefit is 1000 while the cost is 800; if he chases Becky, the benefit is 700 while the cost is 200; if he goes after Cindy, the benefit is 500 while the cost is 400.
His opportunity cost of going after Anna is
(A) 100;
(B) 200;
(C) 500;
(D) None of the above.
Ans: C.

18. 上題帶給我們的啟示是
(A) 公認的帥哥美女確實可能乏人追求；
(B) 追求公認的帥哥美女之機會成本是零；
(C) 欲降低機會成本，就應追求最喜歡的對象；
(D) 機會成本與成本效益分析是相互矛盾的。
Ans: A. [Here Tom prefers Anna to Becky yet it is to his best interest if he goes after Becky, not Anna.]

19. [continued from question 17] Tom’s opportunity cost
(A) of going after Becky is 1000;
(B) of going after Cindy is 1000;
(C) of going after Cindy is 500;
(D) of going after Becky is 500.
Ans: C. [His opportunity cost of going after either Anna or Cindy is 500; after Becky is 200.]

20. You took a taxi from airport back to your home to get the passport that you forgot to bring with you. The taxi fare was NTD400 but you could not (and would not) pay. Why? You only had a NTD1000 bill in your wallet. Besides, you did not want to wait for another taxi to take you back to the airport. So, you cut it into two pieces and gave the taxi driver one piece and asked him to wait for you in the car with engine running. You promised him that you will run into the building and get your thing in a few minutes. The driver’s sunk cost is
(A) 400; (B) 600; (C) 500; (D) None of the above.
Ans: A. [Solution to Quiz One]

21. [continued from question 20] Your sunk cost is
(A) 400; (B) 600; (C) 1000; (D) None of the above.
Ans: B. [NTD1000 out of your pocket yet the fare was 400. Solution to Quiz One.]

22. [continued from question 20] If the driver chooses not to wait for you as soon as you run into the building, then
(A) his opportunity cost of doing so is 1000;
(B) his cost of doing so is 400;
(C) his opportunity cost of doing so is 0;
(D) his cost of doing so is 800.
Ans: B. [His opportunity cost of doing so is 800; his cost of doing so is 400.]

23. [continued from question 20] 此題靈感來自於那位演員主演的影片？
(A) Brad Pitt;
(B) Will Smith;
(C) Hugh Grant;
(D) Tom Cruise.
Ans: D. [Recall what I said during Quiz One]

24. 王大明的經濟學在大一不幸被當。大二重修，只得56分。大二暑假時，暑修以78分過關。One possible explanation has something to do with
(A) comparative advantage;
(B) absolute advantage;
(C) paying to get easy grade;
(D) hot weather makes students work harder.
Ans: A. [Very likely he does not have the absolute advantage when he is competing with students in a large class. In summer session, the competition is not so tough, besides he might be taking one course only while many of his classmates are taking at least two courses at the same time.]

25. Nowadays outsourcing has become increasingly popular. In light of it, your better choice in job upon graduation might be
(A) handling documents for a law firm;
(B) working at the front desk in some bank;
(C) helping rich people with their offshore investment ;
(D) designing web pages for your company.
Ans: C. [face-to-face communication and interpersonal relation]

26. 烏托邦大學決定調漲學費，將所有校園清潔工作，外包給民間業者。其主要理由不含
(A) 學生打掃的機會成本過高；
(B) 學生打掃的成本過高；
(C) 學生勤奮向學的現象普遍；
(D) 學生認真打掃的誘因偏低。
Ans: B.

27. 下列何者與 outsourcing 有關？
(A) 台商在大陸投資設廠；
(B) 營造商雇用外勞；
(C) 政府招考公職人員；
(D) 高鐵資遣所有高階外籍主管。
Ans: B.

28. 十五年前小鎮有十家麵包店。居民在電視看到葡式蛋塔，希望麵包店也能引進新技術生產它。
(A) 率先生產的麵包店，其生產葡式蛋塔的機會成本是較低的；　
(B) 率先生產的麵包店，其生產葡式蛋塔的機會成本是較高的；　
(C) 葡式蛋塔的市場供給是負斜率；
(D) 率先生產的麵包店，其生產葡式蛋塔的成本一定是較低。
Ans: A. [p.67, text]

29. Suppose that the court-rental fee falls. This will make
(A) the price of tennis balls fall;
(B) the price of tennis balls rise;
(C) the demand curve of tennis balls shifts to the left;
(D) the supply curve of tennis balls shifts to the right.
Ans: B. [p.76, text]

30. The production possibility curve (or PPC) in Figure 2.6 is best explained by
(A) constant opportunity cost;
(B) increasing opportunity cost;
(C) decreasing opportunity cost;
(D) first increasing then decreasing opportunity cost.
Ans: B. [pp.48-49, text]

31. There are two agents, A and B. Suppose that each agent has 10 hours to spend on producing goods. Assume that for one hour in the production of (good) X, A can produce 4 units of good X; for one hour in the production of (good) Y, A can produce 8 units of good Y. Assume that for one hour in the production of X, B can produce 4 units of good X; for one hour in the production of Y, B can produce 4 units of good Y. As we did in class, perfect divisibility and fixed technology are assumed throughout.
(i) Precisely depict the PPC (or PPF) for A on the x-y plane. You must write down the equation, indicate the intercepts and slope.
Ans: The PPF for A is (1/4)x + (1/8)y = 10 or 2x + y = 80. Vertical intercept is 80, horizontal intercept is 40, and the slope is -2.
(ii) Does anyone have the absolute advantage in producing some good? Carefully explain.
Ans: For one hour in the production of (good) X, A can produce 4 units of good X, likewise for B in producing X. Hence none has the absolute advantage in producing X. Yet, obviously A has the absolute advantage in producing good Y (due to 8 > 4).
(iii) What is A’s opportunity cost of producing good X? What is B’s opportunity cost of producing good X? Does anyone have the comparative advantage in producing some good?
Ans: The PPF for A is (1/4)x + (1/8)y = 10 or 2x + y = 80; the PPF for B is (1/4)x + (1/4)y = 10 or x + y = 40. Hence, A’s opportunity cost of producing one unit of good X is 2 units of good Y. B’s opportunity cost of producing one unit of good X is 1 unit of good Y. We see that B has the lower opportunity cost in producing good X (than A does), hence, B has the comparative advantage in producing good X. [Of course, A has the comparative advantage in producing good Y.]
(iv) After each agent specializes on producing some good according to the comparative advantage, a free trade takes place. Name a reasonable relative price of good one for them to trade. Hint: Some real number.
Ans: Any number between 1 and 2 will do.

32. This question is intended to test whether you can think like an economist. 常常聽到學生家長說：「我家的寶貝兒子(女兒)，聰明倒是還好，就是不知用功，成績單竟是滿江紅。各位老師，我真的誠心拜託您們嚴管勤教！」在學校，這類學生常說：「我真的盡了最大努力，就是老師不會教，害我成績單竟是滿江紅。」為何家長與學生的說法，竟是南轅北轍？學校又該有何對策呢？
Ans: 如果說自己的寶貝兒子(女兒)，不夠聰明，由遺傳學來看，豈不是自己承認自家人輸在起跑點上？此外，一般人多認為，「聰明不用功」的學生，應該比「用功但不聰明」的學生，較容易教導。至少，家長認為繳學費，就是要老師督促學生用功。學生知道家長對老師的請託，所以不會承認自己不用功。家長看的是自己的子女，老師面對的是整班學生、以前教的學生、以後教的學生，考量的層面與深度，自然不同。家長對子女的學習，正符合「資訊不對稱」，學校可以多多要求授課與評量透明化，目前已經做的有授課大綱上網、期中預警，甚至強制全面點名制。只是學生在教室的態度，在沒有全程錄影的當下，只有該班同學與教師，心知肚明。教師若以課後作業督促同學學習，相較於其他較軟性、輕鬆的課程，易引起同學反彈。心智較未成熟者，期末在匿名教學評量上，發洩似的修理老師一番，心想反正老師也只有私下生悶氣的份。較怕事或是沒擔當、經驗不足的老師以邏輯思考倒推回去，設法不讓同學起反感，…… 如此惡性循環，家長的美夢，很容易就落空了。我的對策是全面透明化，教學內容、試題解答、教師對學生的考核、學生給教師的評量，一切攤在陽光下。此類資訊，應該對學生未來的雇主，最有幫助。

閱卷過程中，看到一些很奇特的答案，節錄公告如下。

增加上課時數
實施補救教學
將班級成績排名
要求學生每週繳交學習心得報告
讓學生回家，由家長自己教
學校詢問學生，以了解老師上課方式有何不妥
學生與老師對話，家長旁聽，然後三方協商
降低學費，同學拿去補習
試題出簡單一點

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Last update on Nov.22, 2009