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BUAD 351 - Economic Analysis for Business Decisions Homework 1 due: Thu 01/29/2009 PART (i): multiple choice please provide the answers in the following box: Question Answer 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 1. Only one thing can cause a movement along the demand curve (instead of a shift in the de- mand curve): a. change in the price of the product shown in the demand graph (the product°s own price) b. change in the price of a substitute good c. change in the price of a complement d. change in income 2. Let the demand for butter be given by Q d butter = 10 ° 5 P butter + I + P margarine : The coe¢ - cient on the price of margarine tells you that butter and margarine are a. complements b. substitutes c. unrelated goods d. none of the above 3. Given the demand curve above, is butter a. a normal good b. an inferior good c. we don°t have enough information to tell 4. Sony decreased the price of Playstation 3 consoles by 10%. In response, the quantity sold increased by 30%. The (absolute value of) elasticity of demand for PS3 is 5. Continuing on the above question, the total consumer expenditure on PS3 1

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