Version A

I. Multiple choice [2 pt each: 36 pts total]

(1)b. (2)b. (3)c. (4)c. (5)a. (6)a. (7)d. (8)b. (9)b. (10)b.
(11)a. (12)c. (13)b. (14)a. (15)b. (16)b. (17)e. (18)a.

II. Problems

(1) [Effect of regulation on quality: 28 pts]

1. 4 million;
2. 7 million;
3. 0;
4. $8 million;
5. 5 million;
6. $8 million;
7. $16 million.

(2) [Maximimum prices and exit restrictions: 20 pts]

1. $0.5 thousand;
2. $8 thousand;
3. 4;
4. $2 thousand;
5. $2.5 thousand.

(3) [Measuring the effects of regulation: 16 pts]

1. Difference-in-differences approach;
2. Event-study approach;
3. Cross-section market comparison approach;
4. Intertemporal (or time-series) approach.

Version B

I. Multiple choice [2 pt each: 28 pts total]

(1)c. (2)c. (3)d. (4)a. (5)b. (6)c. (7)a. (8)d. (9)d. (10)a.
(11)c. (12)c. (13)a. (14)a. (15)d. (16)b. (16)c. (18)c.

II. Problems

(1) [Effect of regulation on quality: 28 pts]

1. 4 million;
2. 5 million;
3. 0;
4. $8 million;
5. 6 million;
6. $2 million;
7. $10 million.

(2) [Maximimum prices and exit restrictions: 20 pts]

1. $2 thousand;
2. $16 thousand;
3. 6;
4. $8 thousand;
5. $10 thousand.

(3) [Measuring the effects of regulation: 16 pts]

1. Cross-section market comparison approach;
2. Intertemporal (or time-series) approach;
3. Difference-in-differences approach;
4. Event-study approach.

[end of answer key]