Question 1

If the price of cucumbers falls by $2 per pound,then the demand for cucumbers will rise by 10 pounds.Therefore we can conclude that the demand for cucumbers is elastic.

Accepted Answer

A) True 
 B)False

Question 2

If the demand function for tickets to a play is q =7,500 - 75p,at what price will total revenue be maximized?

Accepted Answer

A)  $100 
B)  $200 
C)  $50 
D)  $25 
E)  none of the above. 
A)  $100 
B)  $200 
C)  $50 
D)  $25 
E)  none of the above.

Question 3

The demand curve for a good is given by p =160 - 6q,where p is the price and q is the quantity of the good.Suppose that the number of consumers in the economy doubles;a "clone" of each consumer,who has exactly the same demand curve as the original consumer,appears.The demand curve for the doubled economy is described by

Accepted Answer

A)  p =320 - 6q. 
B)  p =320 - 12q. 
C)  p = 160 - 12q. 
D)  p = 160 - 3q. 
E)  p =80 - 3q. 
A)  p =320 - 6q. 
B)  p =320 - 12q. 
C)  p = 160 - 12q. 
D)  p = 160 - 3q. 
E)  p =80 - 3q.

Question 4

If a consumer has to pay his reservation price for a good,then he gets no consumer surplus from purchasing it.

Accepted Answer

A) True 
 B)False

Question 5

The only quantities of good 1 that Barbie can buy are 1 unit or 0 units.For x1 equal to 0 or 1 and for all positive values of x2,suppose that Barbie's preferences were represented by the utility function (x1 + 4)(x2 + 18).Then if her income were $16,her reservation price for good 1 would be

Accepted Answer

A)  $13.60. 
B)  $6.80. 
C)  $9.50. 
D)  $0.22. 
E)  $4.40. 
A)  $13.60. 
B)  $6.80. 
C)  $9.50. 
D)  $0.22. 
E)  $4.40.

Question 6

In the reservation price model,either aggregate demand is zero or everyone demands one unit of the good.

Accepted Answer

A) True 
 B)False

Question 7

Demand for Barbara Streisand CDs is equal to Qs =P1.70sI2.20P1.80c,where Qs is the number of CDs,Ps is the price of a Streisand CD,I is per capita income,and Pc is the price of a Karen Carpenter CD.Streisand and Carpenter CDs

Accepted Answer

A)  are inferior goods. 
B)  are complements. 
C)  are substitutes. 
D)  have diminishing returns to scale. 
E)  are not as good as the original 8-track tapes. 
A)  are inferior goods. 
B)  are complements. 
C)  are substitutes. 
D)  have diminishing returns to scale. 
E)  are not as good as the original 8-track tapes.

Question 8

The only quantities of good 1 that Irene can buy are 1 unit or 0 units.For all positive values of x2,Irene's preferences are represented by the utility function (x1 +10)(x2 +2).If her income is $8 and the price of good 2 is $1,then Irene's reservation price for good 1 is

Accepted Answer

A)  $1.82. 
B)  $1.50. 
C)  $.91. 
D)  $5. 
E)  $.10. 
A)  $1.82. 
B)  $1.50. 
C)  $.91. 
D)  $5. 
E)  $.10.

Question 9

If the elasticity of demand curve for buckwheat is -1.25 at all prices higher than the current price,we would expect that when bad weather reduces the size of the buckwheat crop,total revenue of buckwheat producers will fall.

Accepted Answer

A) True 
 B)False

Question 10

In Tassel,Illinois (pop.20,000),there are two kinds of families,those who like swimming pools and those who don't.Half of the population is of each type.Families who like swimming pools are willing to spend up to 5% of their income each year on a swimming pool.Families who don't like them would pay nothing for a swimming pool.Nobody wants more than one swimming pool and nobody has thought of sharing a swimming pool.Incomes in Tassel range between $10,000 and $110,000.For incomes M in this range,the number of families in Tassel with income greater than M is about 22,000 - .2M.(The two types of families have the same income distribution. )Find the aggregate demand function for swimming pools in Tassel (demand for swimming pools as a function of the annual cost of having one).

Accepted Answer

The number of people willing t

Question 11

The demand for tickets to a rock concert is given by D(p)= 200,000 -10,000p,where p is the price of tickets.If the price of tickets is $17,then the price elasticity of demand for tickets is

Accepted Answer

A)  -2.83. 
B)  -11.33. 
C)  -17. 
D)  -8.50. 
E)  -5.67. 
A)  -2.83. 
B)  -11.33. 
C)  -17. 
D)  -8.50. 
E)  -5.67.

Question 12

Rod cares about the number of cars he has and the amount of money he has to spend on other stuff.The only possibilities of interest for Rod are having 0,1,or 2 cars.Where x is the number of cars he has and y is the money he has per year for other stuff,Rod's utility is U(0,y)=y.5,U(1,y)=(15/14)y.5,and U(2,y)=(10/9)y.5.Rod's income is $25,000 a year.It would cost Rod $2,500 a year to have 1 car and $3,500 a year to have 2 cars.How many cars will he choose?

Accepted Answer

A)  0 
B)  1 
C)  2 
D)  He is indifferent between buying 1 and buying 2 cars. 
E)  He is indifferent between buying 2 and buying 3 cars. 
A)  0 
B)  1 
C)  2 
D)  He is indifferent between buying 1 and buying 2 cars. 
E)  He is indifferent between buying 2 and buying 3 cars.

Question 13

If the supply curve for x is given by x=100p2,then the inverse supply curve is given by

Accepted Answer

A)  100/p2. 
B)  x2/100. 
C)  x1/2/10. 
D)  p-2/100. 
E)  none of the above. 
A)  100/p2. 
B)  x2/100. 
C)  x1/2/10. 
D)  p-2/100. 
E)  none of the above.

Question 14

The only quantities of good 1 that Barbie can buy are 1 unit or 0 units.For x1 equal to 0 or 1 and for all positive values of x2,suppose that Barbie's preferences were represented by the utility function (x1 +8)(x2 + 16).Then if her income were $4,her reservation price for good 1 would be

Accepted Answer

A)  $4.44. 
B)  $8.50. 
C)  $2.22. 
D)  $.50. 
E)  $1.90. 
A)  $4.44. 
B)  $8.50. 
C)  $2.22. 
D)  $.50. 
E)  $1.90.

Question 15

Suppose that the inverse demand function for wool is p = A/q for some constant A.Suppose that 1/4 of the world's wool is produced in Australia.
a.If Australian wool production increases by 1% and the rest of the world holds its output constant,what will be the effect on the world price of wool?
b.How does the marginal revenue to Australia from an extra unit of wool relate to the price of wool?

Accepted Answer

a.Price will fall by

Question 16

The inverse demand curve P(x)for a good x measures the price per unit at which the quantity x would be demanded.

Accepted Answer

A) True 
 B)False

Question 17

At a large institution of higher learning,the demand for football tickets at each game is 100,000 -6,000p.If the capacity of the stadium at that university is 60,000 seats,what is the revenue maximizing price for this university to charge per ticket?

Accepted Answer

A)  $16.67 
B)  $8.33 
C)  $6.67 
D)  $4.17 
E)  $25 
A)  $16.67 
B)  $8.33 
C)  $6.67 
D)  $4.17 
E)  $25

Question 18

The inverse demand for a good is given by p =60 - 2q.Suppose that the number of consumers doubles.(For each consumer in the market another consumer with an identical demand function appears. )The demand curve shifts to the right,doubling demand at every price,while the slope of the demand curve stays unchanged.

Accepted Answer

A) True 
 B)False

Question 19

If the demand for the Weekly World News at a local grocery store is described by Q = 2,500 - 400P -I/10for I =$15,000 and P = $1.50,the marginal revenue of an additional paper sold at this store is

Accepted Answer

A)  $.15. 
B)  $.38. 
C)  $.50. 
D)  $1.50. 
E)  $1. 
A)  $.15. 
B)  $.38. 
C)  $.50. 
D)  $1.50. 
E)  $1.

Question 20

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 $20,then the price elasticity of demand for drangles is

Accepted Answer

A)  -7.62. 
B)  -.81. 
C)  -5.71. 
D)  -3.81. 
E)  -1.90. 
A)  -7.62. 
B)  -.81. 
C)  -5.71. 
D)  -3.81. 
E)  -1.90.

Exam 15:Market Demand-Part A

If the price of cucumbers falls by $2 per pound,then the demand for cucumbers will rise by 10 pounds.Therefore we can conclude that the demand for cucumbers is elastic.

If the demand function for tickets to a play is q =7,500 - 75p,at what price will total revenue be maximized?

If a consumer has to pay his reservation price for a good,then he gets no consumer surplus from purchasing it.

The only quantities of good 1 that Barbie can buy are 1 unit or 0 units.For x1 equal to 0 or 1 and for all positive values of x2,suppose that Barbie's preferences were represented by the utility function (x1 + 4)(x2 + 18).Then if her income were $16,her reservation price for good 1 would be

In the reservation price model,either aggregate demand is zero or everyone demands one unit of the good.

Demand for Barbara Streisand CDs is equal to Qs =P1.70sI2.20P1.80c,where Qs is the number of CDs,Ps is the price of a Streisand CD,I is per capita income,and Pc is the price of a Karen Carpenter CD.Streisand and Carpenter CDs

The only quantities of good 1 that Irene can buy are 1 unit or 0 units.For all positive values of x2,Irene's preferences are represented by the utility function (x1 +10)(x2 +2).If her income is $8 and the price of good 2 is $1,then Irene's reservation price for good 1 is

If the elasticity of demand curve for buckwheat is -1.25 at all prices higher than the current price,we would expect that when bad weather reduces the size of the buckwheat crop,total revenue of buckwheat producers will fall.

The demand for tickets to a rock concert is given by D(p)= 200,000 -10,000p,where p is the price of tickets.If the price of tickets is $17,then the price elasticity of demand for tickets is

If the supply curve for x is given by x=100p2,then the inverse supply curve is given by

The only quantities of good 1 that Barbie can buy are 1 unit or 0 units.For x1 equal to 0 or 1 and for all positive values of x2,suppose that Barbie's preferences were represented by the utility function (x1 +8)(x2 + 16).Then if her income were $4,her reservation price for good 1 would be

The inverse demand curve P(x)for a good x measures the price per unit at which the quantity x would be demanded.

At a large institution of higher learning,the demand for football tickets at each game is 100,000 -6,000p.If the capacity of the stadium at that university is 60,000 seats,what is the revenue maximizing price for this university to charge per ticket?

If the demand for the Weekly World News at a local grocery store is described by Q = 2,500 - 400P -I/10for I =$15,000 and P = $1.50,the marginal revenue of an additional paper sold at this store 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 $20,then the price elasticity of demand for drangles is

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 only quantities of good 1 that Barbie can buy are 1 unit or 0 units.For x₁ equal to 0 or 1 and for all positive values of x₂,suppose that Barbie's preferences were represented by the utility function (x₁ + 4)(x₂ + 18).Then if her income were $16,her reservation price for good 1 would be

Demand for Barbara Streisand CDs is equal to Q_s =P^1.70_sI^2.20P^1.80_c,where Qs is the number of CDs,P_s is the price of a Streisand CD,I is per capita income,and Pc is the price of a Karen Carpenter CD.Streisand and Carpenter CDs

The only quantities of good 1 that Irene can buy are 1 unit or 0 units.For all positive values of x₂,Irene's preferences are represented by the utility function (x₁ +10)(x₂ +2).If her income is $8 and the price of good 2 is $1,then Irene's reservation price for good 1 is

If the supply curve for x is given by x=100p²,then the inverse supply curve is given by

The only quantities of good 1 that Barbie can buy are 1 unit or 0 units.For x₁ equal to 0 or 1 and for all positive values of x₂,suppose that Barbie's preferences were represented by the utility function (x₁ +8)(x₂ + 16).Then if her income were $4,her reservation price for good 1 would be

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 $20,then the price elasticity of demand for drangles is