MGEA02H3 Study Guide - Final Guide: Economic Surplus, Normal Good, Price Floor

• School: UTSC
• Department: Economics for Management Studies
• Course: MGEA02H3
• Professor: Gordon Cleveland

Document Summary

Solutions to first term test, written on october 10, 2003. Please note that there were 2 different versions of the exam. Exam#1 identified the professors as michael krashinsky and gordon cleveland; in question #1, option a was attainable and efficient . Exam#2 identified the professors as gordon cleveland and michael krashinsky; in question #1, option a was attainable and inefficient . Exam#1 had answers: b b e c e a a. Q1: on the ppf, if x = 5, y = 6. 9 (approx), so the point (5,6) is attainable and inefficient. Q2: opportunity cost of x = -dy/dx = 1 - (x+1)-. 5 at x = 3, cost = 1/2. Q3: opportunity cost of y = -dx/dy at x = 8, -dy/dx = 2/3, so -dx/dy = 3/2. Q4: negative second derivative tells us that negative slope of ppf is getting larger as x increases, which makes the ppf bow out, which is identified with increasing costs.