Exam 15:Market Demand-Part A

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If a rational consumer must consume either zero or one unit of a good,then an increase in the price of that good with no change in income or in other prices can never lead to an increase in the consumer's demand for it.

(True/False)

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Question 41

Given his current income,Rico's demand for bagels is related to the price of bagels by the equation Q = 520 - 12P.Rico's income elasticity of demand for bagels is known to be equal to 0.5 at all prices and incomes.If Rico's income quadruples,his demand for bagels will be related to the price of bagels by the equation

(Multiple Choice)

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Question 42

In general,aggregate demand depends only on prices and total income and not on income distribution.

(True/False)

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Question 43

The inverse demand function for coffee is p=50,000 - 2q,where q is the number of tons produced and p is the price per ton.Total revenue from coffee sales be maximized when the output level is

(Multiple Choice)

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Question 44

Ed has 100 tons of manure.The lowest price at which he is willing to sell it is $10 per ton.Fred wants to buy 100 tons of manure.The most he is willing to pay is $8 per ton.The federal government offers to subsidize manure sales at a rate of $1 per ton.If Ed and Fred are the only people who deal in manure,then the deadweight loss caused by the subsidy is

(Multiple Choice)

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Question 45

The demand function is described by the equation q(p)F= 130 -p/5.The inverse demand function is described by the equation

(Multiple Choice)

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Question 46

The inverse demand function for soybeans is p = 68,000 -5q.Total revenue in this market will be maximized when the quantity of soybeans produced is

(Multiple Choice)

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Question 47

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 50 Dodge owners.If the price of gasoline is $4.25,what is the total amount of gasoline demanded in Gas Pump?

(Multiple Choice)

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Question 48

Dr.Social Science has recently figured out how to clone consumers.His first effort was done on the population of Walla,Washington.Each original citizen got a clone who had exactly the same income and preferences.Which of the following statements describes what happened to the demand function for tuna-fish casseroles in Walla?

(Multiple Choice)

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Question 49

A firm faces a demand function D(p),for which the revenue-maximizing price is $16.The demand function is altered to 2D(p).What is the new revenue-maximizing price?

(Multiple Choice)

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Question 50

Bart Wurst runs the only hot-dog stand in a large park in a large boring town.On Sundays people in this town all sit in the park and sunbathe.For any t between 0 and 30,the number of people who are sitting within t minutes of Bart's stand is 10t².People in Bart's town are lazy and hate to walk.They think that every minute of walking they do is as bad as spending $.10.Everybody in the park has a reservation price of $1 for a hot dog,where the cost of a hot dog includes the subjective cost of walking as well as the money price they have to pay when they get there.(Nobody has ever thought of fetching a hot dog for someone else. )Find a formula for the demand curve for Bart's hot dogs.Explain how you got it.

(Essay)

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Question 51

If the demand curve for a good is given by the equation q = 2/p,where q is quantity and p is price,then at any positive price,the elasticity of demand will be -1.

(True/False)

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Question 52

Using the graph of a demand curve,explain why marginal revenue is less than price.

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Question 53

If Castor's demand curve is described by q = 40 - p and Pollux's demand curve is given by q = 60 - 2p,then each of their demand curves will pass through the point q=20,p F=20.Therefore if they are the only two consumers in a market,the market demand curve will also pass through q = 20,p = 20.

(True/False)

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Question 54

A person with a quasilinear utility function will

(Multiple Choice)

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Question 55

If consumer 1 has the demand function x₁ = 1,000 -2p and consumer 2 has the demand function x₂ = 500 - p,then the aggregate demand function for an economy with just these two consumers would be x=1,500 - 3p for p $\lt$ 500.

(True/False)

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Question 56

Given his current income,Rico's demand for bagels is related to the price of bagels by the equation Q= 540 -16P.Rico's income elasticity of demand for bagels is known to be equal to 0.5 at all prices and incomes.If Rico's income quadruples,his demand for bagels will be related to the price of bagels by the equation

(Multiple Choice)

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Question 57

If the amount of money that people are willing to spend on a good stays the same when its price doubles,then demand for that good must have a price elasticity of demand smaller in absolute value than 1.

(True/False)

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Question 58

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

(Multiple Choice)

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Question 59

Jen,Eric,and Kurt are all buyers of chain saws.Jen's demand function is Q_j =520 -13P,Eric's demand function is Q_e= 40 - P,and Kurt's demand function is Q_k =200 -5P.Together,these three constitute the entire demand for chainsaws.At what price will the price elasticity of market demand be 21?

(Multiple Choice)

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Question 60

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Exam 15:Market Demand-Part A

If a rational consumer must consume either zero or one unit of a good,then an increase in the price of that good with no change in income or in other prices can never lead to an increase in the consumer's demand for it.

In general,aggregate demand depends only on prices and total income and not on income distribution.

The inverse demand function for coffee is p=50,000 - 2q,where q is the number of tons produced and p is the price per ton.Total revenue from coffee sales be maximized when the output level is

The demand function is described by the equation q(p)F= 130 -p/5.The inverse demand function is described by the equation

The inverse demand function for soybeans is p = 68,000 -5q.Total revenue in this market will be maximized when the quantity of soybeans produced is

A firm faces a demand function D(p),for which the revenue-maximizing price is $16.The demand function is altered to 2D(p).What is the new revenue-maximizing price?

If the demand curve for a good is given by the equation q = 2/p,where q is quantity and p is price,then at any positive price,the elasticity of demand will be -1.

Using the graph of a demand curve,explain why marginal revenue is less than price.

If Castor's demand curve is described by q = 40 - p and Pollux's demand curve is given by q = 60 - 2p,then each of their demand curves will pass through the point q=20,p F=20.Therefore if they are the only two consumers in a market,the market demand curve will also pass through q = 20,p = 20.

A person with a quasilinear utility function will

If consumer 1 has the demand function x1 = 1,000 -2p and consumer 2 has the demand function x2 = 500 - p,then the aggregate demand function for an economy with just these two consumers would be x=1,500 - 3p for p <\lt< 500.

If the amount of money that people are willing to spend on a good stays the same when its price doubles,then demand for that good must have a price elasticity of demand smaller in absolute value than 1.

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

Jen,Eric,and Kurt are all buyers of chain saws.Jen's demand function is Qj =520 -13P,Eric's demand function is Qe= 40 - P,and Kurt's demand function is Qk =200 -5P.Together,these three constitute the entire demand for chainsaws.At what price will the price elasticity of market demand be 21?

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

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If consumer 1 has the demand function x₁ = 1,000 -2p and consumer 2 has the demand function x₂ = 500 - p,then the aggregate demand function for an economy with just these two consumers would be x=1,500 - 3p for p $\lt$ 500.

Jen,Eric,and Kurt are all buyers of chain saws.Jen's demand function is Q_j =520 -13P,Eric's demand function is Q_e= 40 - P,and Kurt's demand function is Q_k =200 -5P.Together,these three constitute the entire demand for chainsaws.At what price will the price elasticity of market demand be 21?