ECON 2510 Name: ____________________________________
Exam #1 March 12, 1998

1. The Swiss monetary unit is the ______________________________________________.
2. The lowest point in the U.S. is _______________________________________________.
3. The next University of California campus will be built in ______________________.

Answer four (4) of the following six (6) Questions.

1. What are the likely effect of price controls in the market? What are the likely situations if they are used?

2. What are externalities? What are spillover costs and how might they be corrected? What are spillover benefits and what should be done to correct for them?

3. Suppose that the comparative - cost ratios of two products - baby formula and tuna fish - are as follows for Canswicki and Tunata:

Canswicki: 1 can baby formula = 2 cans tuna
Tunata: 1 can baby formula = 4 cans tuna

What can you conclude about this situation? Explain your conclusion.

4. Distinguish between normal profits, economic or pure profits; and short term vs. long run. Also what are explicit vs. implicit costs.

5. Compare and contrast the proprietorship and corporals form of business organization. What are the advantages of each?

6. What is the price elasticity of demand? How is it measured? How could businesses use this information?