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(solution) QUESTION 1 Vintage champagne has the following demand function Qd

QUESTION 1

- Vintage champagne has the following demand function Qd = 100 -2P and a supply curve given by the following Qs=20. What is the value of own price elasticity in absolute terms of demand at the equilibrium?
1/4 1/3 2/3 4 infinite

1 points

- Consider the demand curves for apples in the market for Tony and Julia:

Julia: p = 100 ? 2q

Tony: p = 100 - 5q

In a competitive equilibrium where price is less than 100, Tony and Julia:Consume different amounts Have the same marginal benefit from the last apple consumed Total expenditure of Tony and Julia is equal. a and b are correct a, b and c are correct

1 points

- Assume that the demand for donuts is given by P=15 and the supply of donuts is given by P=10 +Q. In equilibrium:
Demand is perfectly elastic and consumer surplus is equal to 12.5 Demand is perfectly inelastic and producer surplus is equal to 12.5 Supply is perfectly elastic and consumer surplus is equal to 12.5 Supply is perfectly inelastic and producer surplus is equal to 12.5 None of the above

1 points

- Assume that you currently spend all your income on two goods, Doner Kebabs and Orange Juice (OJ). Assume that each Doner Kebab costs $6 and each glass of OJ costs $2. If the marginal utility on the last Doner Kebab consumed equals 4 and the marginal utility on the last glass of OJ equals 3, then to maximise utility you should:
Increase expenditure on Doner Kebabs and decrease expenditure on OJ. Decrease expenditure on Doner Kebabs and increase expenditure on OJ. Increase expenditure on Doner Kebabs and increase expenditure on OJ. Decrease expenditure on Doner Kebabs and decrease expenditure on OJ. Information on your income is required to answer this question.

1 points

- A consumer halves her quantity of ice cream consumed when income increases by 25%. As a result we can say that income elasticity of demand for ice cream is:
-2.0. -0.5 1 2 4

1 points

- Assume that the market price of a small ?double expresso soy cappuccino? equals p=8. For Gladys?, a coffee connoisseur, her willingness to pay is indicated below. How many cups will Gladys buy?
Quantity Willingness to pay 0 0 1 18 2 30 3 39 4 45 5 48 1 2 3 4 5

1 points

- Assume that Barry enjoys fine wine. In fact, he enjoys it so much that he buys himself Grange Hermitage on his birthday. For Barry, his willingness to pay for Grange is indicated below. If the price is $100 per bottle, how much consumer surplus will Barry have if he chooses an optimal amount of Grange to consume?

Quantity Willingness to pay 0 0 1 400 2 450 3 475 4 490 5 500 0 200 250 300 350

1 points

- Consider the demand and supply curves for petrol: Q
_{d}= 1000 ?P, Q_{s}=p-200. At the competitive equilibrium consumer surplus is equal to:4000 8000 40000 80000 160000

1 points

- Consider the supply curve for tea: p= 12 + 2Q. Using the arc elasticity formula the value of own price elasticity of supply between prices 40 and 44 equals:
0 1/2 5/7 7/5 2

1 points

- Consider the following demand curves shown below:

Which of the following statements relating to own price elasticity of demand is true?At price P*, D _{0}is more elastic than D_{1}At price P*, D _{0}is less elastic than D_{1}At price P*, D _{0}has the same value of elasticity as D_{1}At price P*, D _{0}and D1 have unit elasticity of demandMore information is required to answer this question

1 points

- Assume that Bill?s income doubles, ceteris paribus, and we observe that as a result he now consumes more petrol and catches the bus less. On the basis of this information we can conclude that:
Petrol and bus travel have positive cross price elasticity. Petrol and bus travel have negative cross price elasticity. Petrol is an inferior good Bus travel is an inferior good Both b and d are correct

1 points

- Which of the following statements is correct?
If the demand curve is downward sloping and the supply curve perfectly inelastic, an increase in demand leads to an increase in equilibrium price. If the demand curve is downward sloping and the supply curve perfectly elastic, an increase in demand leads to an increase in equilibrium price. If the demand curve is downward sloping and the supply curve upward sloping, an increase in demand leads to an increase in equilibrium quantity. a and b are correct a and c are correct

1 points

- Assume that demand for Hot Cross Buns is given by the following: p=10. Supply is given by the following: p = Q
_{S}. At the market equilibrium consumer surplus is equal to:0 1 10 infinite more information is required to answer this question.

1 points

- Assume that Peter?s income increases from $25000 to $26000, ceteris paribus. Following this his expenditure on oysters increases from $400 to $500. Based on this information we can say:
Peter?s price elasticity of demand for oysters is elastic Peter?s price elasticity of demand for oysters is inelastic Peter?s price elasticity of demand for oysters is unit elastic Oysters are an inferior good for Peter Oysters are a luxury good for Peter

1 points

- The supply curve for orange juice is give by the following: Qs = 30 + 3p. At a price of $2 the price elasticity of supply is:
0 0.167 0.333 3 6

1 points

- Consider two goods, Gatorade and Milo Energy Bars. If the price of Gatorade decreases ceteris paribus, we observe an increase in the quantity of Milo Energy bars consumed. This indicates that Gatorade and Milo Energy bars are __________ and cross price elasticity is __________.
complements; negative substitutes; negative complements; positive substitutes; positive More information is required to answer this question

1 points

- Assume the demand curve for labour is given by the following: w = 1000 -5L
_{d}, where w is the wage rate and L_{d}is the quantity of labour demanded. Further assume that the supply of labour is given by the following: w=5L_{s}where and L_{s}is the quantity of labour supplied. If the government imposes a price floor or minimum wage of 400 which of the following statements is true:the minimum wage is binding and there is a shortage of labour equal to 100 the minimum wage is binding and there is a shortage of labour equal to 200 the minimum wage is binding and there is a surplus of labour equal to 100 the minimum wage is binding and there is a surplus of labour equal to 200 None of the above

1 points

- Vintage champagne has the following demand function Qd = 100 -2P and a supply curve given by the following Qs=20. What is the value of consumer surplus at the market equilibrium?
0 30 40 100 200

1 points

- Assume that there are ten identical firms producing printers. The supply curve for each firm is given by the following: p= 50 + 2q. If the market price is equal to 100, what is the value of own price elasticity of supply at the market equilibrium?
0.5 1 2 5 10

1 points

- Assume that Barry enjoys fine wine. In fact, he enjoys it so much that he buys himself Grange Hermitage on his birthday. For Barry, his willingness to pay for Grange is indicated below. If the price is $200 per bottle, how many bottle will Barry buy?

Quantity Willingness to pay 0 0 1 400 2 450 3 475 4 490 5 500 0 1 2 3 4

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