Multiple Choice
| Question | Form A | Form B | Form C | Form D | Form E |
|---|---|---|---|---|---|
| 1 | B | C | C | B | A |
| 2 | A | A | B | B | B |
| 3 | B | C | A | A | B |
| 4 | A | C | B | D | D |
| 5 | D | A | D | D | D |
| 6 | A | A | C | B | C |
| 7 | B | C | D | C | C |
| 8 | D | D | C | A | B |
| 9 | B | B | B | C | A |
| 10 | B | B | A | C | B |
| 11 | A | B | B | B | B |
| 12 | C | B | A | B | C |
| 13 | B | C | B | A | B |
| 14 | C | B | A | C | C |
| 15 | A | A | C | B | A |
| 16 | B | D | B | A | B |
| 17 | C | B | B | A | A |
| 18 | C | B | A | D | D |
| 19 | D | D | C | C | C |
| 20 | C | A | D | B | A |
Problem 21
This problem is the same on all forms.
Part A: The equilibrium price is $1.60 (and quantity 400).
Part B: The $0.80 tax wedge results in a demand price of $2.00,
supply price of $1.20, and quantity of 300.
Part C: The change in demand price is $0.40, as is the change in supply price.
The tax is split evenly between buyers and sellers.
Part D: It makes no economic difference whether the tax is an excise tax or
sales tax.
Problem 22
Due to an error in the statement of the problem, two answers were accepted. One is found by equating the marginal utility per dollar (MU/p) of both goods. This occurs at 4 lbs. of apples and 2 lbs. of oranges.
The second (and truly correct) answer is found by computing the utility at every combination of goods, and finding a maximum at 0 apples and 6 lbs. of oranges. This could also have been found by careful examination of the marginal utility per dollar curves for both apples and oranges.