hw1 - BUAD 351 - Economic Analysis for Business Decisions...

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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): 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 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 a. 1/3 b. 1 c. 3 d. none of the above 5. Continuing on the above question, the total consumer expenditure on PS3 a. Stayed the same b. Decreased c. Increased d. There is not enough information to answer this question 1
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P Q P Q figure 1 figure 2 S S' D S D D' Figure 1: question 6 a. Figure 1 correctly illustrates the impact of an increase in the price of an important input
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hw1 - BUAD 351 - Economic Analysis for Business Decisions...

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