QUESTION 2 The U0 Union is considering two expenditure options. It can either buy 20,000 ice-creams (each costing $2.50) to distribute to UQ students or it can construct a skate park costing $50,000 for students to freely use. There are approximately 50,000 students at U0 and each student values an icecream (and every additional icecream) at $2.50 and the use of the skate park at $2.50. Which of the following statements are true: D The total summed MB for the skate park is $50,000. The total summed MB for the skate park is $125,000 when considering all students. 0 The total summed MB for ice-creams is $125,000 and the MC is $50,000, so choosing this option would not make economic sense. For each icecream consumed, the MB equals the MC. QUESTION 3 Sarah and John have spent all morning climbing Mt Coottha and are enjoying the view at the top of the mountain whilst eating lunch. At 1:30pm a group of 80 tourists reach the top of the mountain and sit down in front of Sarah and John, blocking their view. Select the item from the list provided to make the following statements true. 11' V Priorto 1:30pm, the view from Mt Cootha for Sarah and 1' > 0 John is a good. 2. Common . Collective 5- V After 1:30pm, the view from Mt Cootha for Sarah and . Bina cats 0 John changes to become ry g ry 3 4 S. Tragedy of the Commons 8- V After 1:30pm, the view from Mt Cootha for Sarah and 6. Non-rivalrous 7 John is a good. . Excludable QUESTION 1 Concern has been raised in Canberra over the construction of McMansions (very large houses) destroying the notion of Canberra as a "Garden City\". Despite trying to impose new town planning laws, larger and larger houses continue being built, further reducing the amount of "green space\". Which of the following statements is true? The new town planning laws have clearly made the construction of the larger houses to now be excludable. O The construction of larger houses is non-rivalrous. O The larger houses are collective goods. O The situation is an example of the Tragedy of the Commons. O The green backyards of McMansions are public goods. QUESTION 4 The 201415 Brisbane City Council budget included 179 million dollars for public parks. If only 21 percent of Brisbane's 2.1 million residents value and use public parks, how much do these residents need to individually value the parks for this to be an efficient use of funds? Answer to the nearest whole dollar per resident (with no decimal points, spaces, $ signs, or commas in your answer). QUESTION 5 Samantha, Ellen, Jane and Daria are looking to construct a community garden which they will share and work on together. The garden will cost them $1,200 to construct. Samantha and Ellen are both willing to pay $400 each, Jane is willing to pay $300 and Daria is only willing to pay $150. Daria and Jane earn twice as much as Samantha and Ellen. Answer the following questions: a. Assuming the community garden is a public good, and considering the marginal benefits and marginal costs involved, would it be constructed? . Type Y for Yes or N for No. b. Samantha suggests they use a proportional taxation system, how much will Ellen pay? $ . Answer to the nearest whole dollar (with no decimal places). c. Would the four agree to fund the garden using a proportional taxation system? . Type Y for Yes or N for No. 1 poi 3 poi QUESTION 6 1 points 5; Karen is taking Hagen shopping because they both need a new pair ofjeans but neither enjoys online shopping. In the large shopping centre they go to there are fifteen stores that sell jeans: nine sell both men's and women's jeans and the other six sell only women's jeans. 1. Hagen and Karen need to view all the stores as the market is perfectly competitive and they have full information. 2. Karen and Hagen should visit only up to the 7th store ifthis is where they believe the MB of attaining the information equals the MC of searching. 3. Karen and Hagen should visit every store to nd the cheapest pair ofjeans. Which of the following statements are true: 0 Only1 is true. 0 Only 2 is true. 0 Both 1 and 2 are true. 0 Both 2 and 3 are true. 0 All three are true. QUESTION 7 2 points 5. The Affordable Care Act 2010 (or Obamacare) aimed to ensure that more Americans would have health insurance policies. One of the concerns raised about the policy was whether young healthy people would sign up, or would it attract only the elderly and the iii. If mostly elderly and ill people signed up, policy rates would inevitably rise. As a result, the higher fees could force out the healthier people who might believe they could do without the insurance. This would leave only the elderly and ill, resulting in policy fees rising with time.. Which of the following statements are true: QUESTION 8 3 points Angelo is looking to take a trip overseas. His mother, Maria, suggests that he go to a travel agent because they are "experts" in the field and will be able to get him the best deal. Select the item from the list provided to make the following statements true. Adverse selection 20% Asymmetric information Marginal benefit Principal-agent problem Expected value 80% Costly to fake principle 9. More time looking 10. Moral hazard 11. Marginal cost V The existence of travel agents is a result of V With the creation of the internet. Angelo could search online instead of visiting different travel agents. This process is likely to have a lower ' V Angelo instead decides to search using the internet. He should search until his marginal cost equals the expected value of his WHP'P'FWNT' 12. Less time looking QUESTION 9 1 points Josh is looking to buy a second hand car. Josh is risk averse. The cars all sell for $3,500 but there is an 7 percent chance that the car will be worth $1,000, a 51 percent chance it will be worth $3,000 or a 42 percent chance that the car is worth an unknown amount. What must the unknown value be if the expected value is to equal $3,500? Give your answer to the nearest whole dollar (with no decimal points, spaces, $ signs, or commas in your answer). QUESTION 10 Jennifer is looking to sell her oneperson Laser sail boat, which she has kept in excellent condition. Ordinarily this type of sail boat sells second-hand for $2,000 but as Jennifer has looked after hers extremely well, she will only want to sell it for $2,400. Tom is looking to buy a second-hand sail boat and is willing to pay up to $2,600 for a boat in excellent condition. Tom has no inexpensive way to determine whether Jennifer's boat is in good condition or not. Answer the following questions: a. Thinking like an economist, would Tom definitely buy the boat from Jennifer? . Type Y for Yes or N for No. b. What is the DWL, as a result of the inefciency caused by the asymmetric information, if Tom did not buy the boat at Jennifer's price? $ .Answer to the nearest whole dollar (with no decimal places). c. Over the next few months, if the proportion of sailboats on the market that are in excellent condition like Jennifer's falis from 25% to 11%, the second hand market for these sail boats best fits what description? . Type in M for Moral hazard, A for Asymmetric information, C for Competitive market, L for Lemons Model, P for Principal agent issue