Question 1

If the demand function for tickets to a play is q = 3,800 - 95p,at what price will total revenue be maximized?

Accepted Answer

A)  $80 
B)  $40 
C)  $20 
D)  $10 
E)  none of the above. 
A)  $80 
B)  $40 
C)  $20 
D)  $10 
E)  none of the above. C

Question 2

The inverse demand function for grapes is described by the equation p = 518 - 5q,where p is the price in dollars per crate and q is the number of crates of grapes demanded per week.When p =$38 per crate,what is the price elasticity of demand for grapes?

Accepted Answer

A)  -190/96 
B)  -5/518 
C)  -5/96 
D)  -96/38 
E)  -38/480 
A)  -190/96 
B)  -5/518 
C)  -5/96 
D)  -96/38 
E)  -38/480 E

Question 3

If a price changes,then changes in consumption at the intensive margin are changes that happen because consumers alter the amounts that they consume but do not either stop consuming or start consuming the good.

Accepted Answer

A) True 
 B)False  True

Question 4

If at current prices,the demand for a good is price-elastic,then for movements along the demand curve,

Accepted Answer

A)  increasing the price will increase revenue. 
B)  decreasing the price will decrease revenue. 
C)  increasing the quantity sold will increase revenue. 
D)  increasing the quantity sold will decrease revenue. 
E)  More than one of the above statements are true. 
A)  increasing the price will increase revenue. 
B)  decreasing the price will decrease revenue. 
C)  increasing the quantity sold will increase revenue. 
D)  increasing the quantity sold will decrease revenue. 
E)  More than one of the above statements are true.

Question 5

In Manifold,Missouri (pop.1,000),people all have the same tastes and they all like Buicks.Nobody wants more than one Buick,but a person with income $M is willing to pay about $.10M per year to have a Buick.Nobody in Manifold has an income greater than $50,000 and nobody has an income less than $10,000.For incomes,$M,between $10,000 and $50,000,the number of people with incomes greater than $M is about 1,250-.025M.If it costs $2,000 a year to have a Buick,how many people in Manifold will demand Buicks?

Accepted Answer

A)  500 
B)  750 
C)  100 
D)  600 
E)  800 
A)  500 
B)  750 
C)  100 
D)  600 
E)  800

Question 6

If the demand function is q = m - 2(ln p)over some range of values of p,then at all such values of p,the absolute value of the price elasticity of demand

Accepted Answer

A)  increases as p increases. 
B)  decreases as p increases. 
C)  is constant as p changes. 
D)  increases with p at small values and decreases with p at large values. 
E)  decreases with p at large values and increases with p at small values. 
A)  increases as p increases. 
B)  decreases as p increases. 
C)  is constant as p changes. 
D)  increases with p at small values and decreases with p at large values. 
E)  decreases with p at large values and increases with p at small values.

Question 7

Fred's price elasticity of demand for milk is -2 at today's prices when we measure price in dollars and quantity of milk in quarts.If the price per quart of milk stays the same but we measure quantity of milk in gallons and price in dollars,then what will be the elasticity of demand for gallons of milk? (A gallon is four quarts. )

Accepted Answer

A)  -1 
B)  -1/2 
C)  -8 
D)  -4 
E)  -2 
A)  -1 
B)  -1/2 
C)  -8 
D)  -4 
E)  -2

Question 8

The demand function for small business computers in the United States is given by x=200- 10p,where x is annual sales measured in thousands of computers and p is the price of a computer measured in thousands of dollars.Japanese firms supply a big share of these computers.They measure prices in yen where 150 yen equal 1 dollar.The price of 1 computer is $10,000.Let Eu be the price elasticity of demand at this price as calculated by US firms who measure in dollars,and let Ej be the price elasticity of demand at the same $10,000 price but measured in yen by the Japanese firms.Which of the following are the values of Eu and Ej,respectively?

Accepted Answer

A)  -1,2150 
B)  -1,21 
C)  -2,22 
D)  -2,2300 
E) -2,20.0133 
A)  -1,2150 
B)  -1,21 
C)  -2,22 
D)  -2,2300 
E) -2,20.0133

Question 9

In Gas Pump,South Dakota,every Buick owner's demand for gasoline is 20 - 5p for p less than or equal to 4 and 0 for p  $\gt$ 4.Every Dodge owner's demand is 15 -3p for p less than or equal to 5 and 0 for p $\gt$5.Suppose that Gas Pump has 100 Buick owners and 100 Dodge owners.If the price of gasoline is $4.50,what is the total amount of gasoline demanded in Gas Pump?

Accepted Answer

A)  300 gallons 
B)  75 gallons 
C)  225 gallons 
D)  150 gallons 
E)  none of the above. 
A)  300 gallons 
B)  75 gallons 
C)  225 gallons 
D)  150 gallons 
E)  none of the above.

Question 10

In the village of Frankfurter,the demand function for sausages per person is D(p)= 20-1.5p,where p is the price of a single sausage.The present population of Frankfurter is 100 persons.Suppose that 10 more people move into town,each of whom has the same demand function as the old residents.At a price of $2,the price elasticity of demand for sausages in Frankfurter is

Accepted Answer

A)  increased by 10%. 
B)  decreased by 10%. 
C)  unchanged. 
D)  increased by 15%. 
E)  none of the above. 
A)  increased by 10%. 
B)  decreased by 10%. 
C)  unchanged. 
D)  increased by 15%. 
E)  none of the above.

Question 11

If the marginal cost of brewing beer is 40 cents and the profit-maximizing price is 90 cents,then the price elasticity of demand is

Accepted Answer

A) -0.66. 
B)  -1.8. 
C)  -2. 
D)  -2.33. 
E)  -3. 
A) -0.66. 
B)  -1.8. 
C)  -2. 
D)  -2.33. 
E)  -3.

Question 12

The demand for Craftmatic Adjustable Beds is described by Qc=P-1.40cI-0.60P0.20mA0.25,where Qc is the number of Craftmatic Adjustable Beds demanded,Pc is the price of a Craftmatic Adjustable Bed,I is per capita income,Pm is the price of a battery-powered massage pillow,and A is the advertising budget.
a.If the marginal cost of producing a Craftmatic Adjustable Bed is $200,what is the profit-maximizing price?
b.Per capita income in the United States is forecast to rise by 3% next year.How will this impact Craftmatic's sales?
c.The price of battery-powered massage pillows suddenly fell by 10%.How will this impact Craftmatic's sales?

Accepted Answer

a.$700.
b.Demand wil

Question 13

The demand for cable television hookups is Q = 100 - 10P0.5 +2I2,where P is price and I is per capita income.Cable TV is

Accepted Answer

A)  a normal good. 
B)  a natural monopoly. 
C)  an inferior good. 
D)  a substitute good. 
E)  a complement good. 
A)  a normal good. 
B)  a natural monopoly. 
C)  an inferior good. 
D)  a substitute good. 
E)  a complement good.

Question 14

The demand function is described by the equation q(p)= 30 -p/3.The inverse demand function is described by the equation

Accepted Answer

A)  q(p)=30 - 3p. 
B)  p(q)= 90- 3q. 
C)  q(p)=1/(30- p/3). 
D)  p(q)= 1/30 -q/3. 
E)  p(q)=30 - q/3. 
A)  q(p)=30 - 3p. 
B)  p(q)= 90- 3q. 
C)  q(p)=1/(30- p/3). 
D)  p(q)= 1/30 -q/3. 
E)  p(q)=30 - q/3.

Question 15

If the marginal cost of making a photocopy is 2 cents and the elasticity of demand is 2.50,the profit-maximizing price is

Accepted Answer

A)  3 cents. 
B)  3.33 cents. 
C)  4 cents. 
D)  5 cents. 
E)  6 cents. 
A)  3 cents. 
B)  3.33 cents. 
C)  4 cents. 
D)  5 cents. 
E)  6 cents.

Question 16

The demand for drangles is given by D(p)= (p - 1)-2,where p is the price of drangles.If the price of drangles is $19,then the price elasticity of demand for drangles is

Accepted Answer

A)  -.80. 
B)  -7.60. 
C)  -5.70. 
D)  -3.80. 
E) -1.90. 
A)  -.80. 
B)  -7.60. 
C)  -5.70. 
D)  -3.80. 
E) -1.90.

Question 17

The demand for watches is Q = 1,000P -0.50I-1.Assume that per capita income I is $5,000.At a price P of $50,the price elasticity of demand is

Accepted Answer

A)  2.50. 
B)  1.0. 
C)  -1. 
D)  -1.50. 
E)  0.50. 
A)  2.50. 
B)  1.0. 
C)  -1. 
D)  -1.50. 
E)  0.50.

Question 18

The inverse demand function for grapes is described by the equation p =676 - 9q,where p is the price in dollars per crate and q is the number of crates of grapes demanded per week.When p =0 $28 per crate,what is the price elasticity of demand for grapes?

Accepted Answer

A)  -9/676 
B) -9/72 
C)  -72/28 
D)  -252/72 
E)  -28/648 
A)  -9/676 
B) -9/72 
C)  -72/28 
D)  -252/72 
E)  -28/648

Question 19

In Ozone,California,people all have the same tastes and they all like hot tubs.Nobody wants more than one hot tub but a person with wealth $W will be willing to pay up to $.01W for a hot tub.The number of people with a wealth greater than $W for any given W in Ozone is approximately 1,000,000/W.The price elasticity of demand for hot tubs in Ozone,California,is

Accepted Answer

A)  -0.1. 
B)  -0.01. 
C)  -1. 
D)  -0.4. 
E)  none of the above. 
A)  -0.1. 
B)  -0.01. 
C)  -1. 
D)  -0.4. 
E)  none of the above.

Question 20

Harry's demand function for blueberries is x = 20 -p,where p is the price and x is the quantity demanded.If the price of blueberries is 3,then what is Harry's price elasticity of demand for blueberries?

Accepted Answer

A)  -6/14 
B)  -2/20 
C)  -2 
D)  -14/6 
E)  none of the above. 
A)  -6/14 
B)  -2/20 
C)  -2 
D)  -14/6 
E)  none of the above.

Exam 15:Market Demand-Part A

If the demand function for tickets to a play is q = 3,800 - 95p,at what price will total revenue be maximized?

The inverse demand function for grapes is described by the equation p = 518 - 5q,where p is the price in dollars per crate and q is the number of crates of grapes demanded per week.When p =$38 per crate,what is the price elasticity of demand for grapes?

If a price changes,then changes in consumption at the intensive margin are changes that happen because consumers alter the amounts that they consume but do not either stop consuming or start consuming the good.

If at current prices,the demand for a good is price-elastic,then for movements along the demand curve,

If the demand function is q = m - 2(ln p)over some range of values of p,then at all such values of p,the absolute value of the price elasticity of demand

If the marginal cost of brewing beer is 40 cents and the profit-maximizing price is 90 cents,then the price elasticity of demand is

The demand for cable television hookups is Q = 100 - 10P0.5 +2I2,where P is price and I is per capita income.Cable TV is

The demand function is described by the equation q(p)= 30 -p/3.The inverse demand function is described by the equation

If the marginal cost of making a photocopy is 2 cents and the elasticity of demand is 2.50,the profit-maximizing price is

The demand for drangles is given by D(p)= (p - 1)-2,where p is the price of drangles.If the price of drangles is $19,then the price elasticity of demand for drangles is

The demand for watches is Q = 1,000P -0.50I-1.Assume that per capita income I is $5,000.At a price P of $50,the price elasticity of demand is

The inverse demand function for grapes is described by the equation p =676 - 9q,where p is the price in dollars per crate and q is the number of crates of grapes demanded per week.When p =0 $28 per crate,what is the price elasticity of demand for grapes?

Harry's demand function for blueberries is x = 20 -p,where p is the price and x is the quantity demanded.If the price of blueberries is 3,then what is Harry's price elasticity of demand for blueberries?

Demand-Part A

Revealed Preference-Part A

Revealed Preference-Part B

Slutsky Equation-Part A

Slutsky Equation-Part B

Buying and Selling-Part A

Buying and Selling-Part B

Intertemporal Choice-Part A

Intertemporal Choice-Part B

Asset Markets-Part A

Asset Markets-Part B

Uncertainty-Part A

Uncertainty-Part B

Risky Assets-Part A

Risky Assets-Part B

Consumers Surplus-Part A

Consumers Surplus-Part B

Market Demand-Part B

Equilibrium-Part A

Equilibrium-Part B

Auctions-Part A

Auctions-Part B

Technology-Part A

Technology-Part B

Profit Maximization-Part A

Profit Maximization-Part B

Cost Minimization-Part A

Cost Minimization-Part B

Cost Curves-Part A

Cost Curves-Part B

Firm Supply-Part A

Firm Supply-Part B

Industry Supply-Part A

Industry Supply-Part B

Monopoly-Part A

Monopoly-Part B

Monopoly Behavior-Part A

Monopoly Behavior-Part B

Factor Markets-Part A

Factor Markets-Part B

Oligopoly-Part A

Oligopoly-Part B

Game Theory-Part A

Game Theory-Part B

Game Applications-Part A

Game Applications-Part B

Behavioral Economics-Part A

Exchange-Part A

Exchange-Part B

Production-Part A

Production-Part B

Welfare-Part A

Welfare-Part B

Externalities-Part A

Externalities-Part B

Information Technology-Part A

Information Technology-Part B

Public Goods-Part A

Public Goods-Part B

Asymmetric Information-Part A

Asymmetric Information-Part B

Filters

The demand for cable television hookups is Q = 100 - 10P^0.5 +2I²,where P is price and I is per capita income.Cable TV is

The demand for drangles is given by D(p)= (p - 1)^-2,where p is the price of drangles.If the price of drangles is $19,then the price elasticity of demand for drangles is

The demand for watches is Q = 1,000P ^-0.50I^-1.Assume that per capita income I is $5,000.At a price P of $50,the price elasticity of demand is