oldmidterm2-solved

oldmidterm2-solved - Econ 142 Fall 2008 Professor Gautam...

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Econ 142 Fall 2008 Professor Gautam Bhattacharya Second Midterm Exam Your Name Your KUID Your TA’s name (circle the right one) Andrew, Lindsay, Tanya, Hui Ma, Sanjibani Time your disc section meets (eg. 1:30 pm Wed) 1. Dennis spends 10 dollars on gasoline every week regardless of the price of gasoline. We can conclude that, for Dennis, a. demand for the product is elastic. b. the elasticity of demand equals one ****** c. demand for the product is inelastic. d. elasticity of demand for the product is zero. 2. A consumer wants to a. maximize her marginal utility subject to her budget constraint. b. Maximize her total utility subject to her budget constraint. ****** c. Maximize her consumption subject to her budget constraint. d. Maximize her budget subject to her total utility. 3. Donuts cost $1.25 each and cinnamon rolls cost $1.25 cents each, and you are currently buying 6 donuts and 4
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cinnamon rolls every week. You find that when you are consuming 6 donuts and 4 cinnamon rolls, your marginal utility of donuts is twice as high as your marginal utility of cinnamon rolls. In order to maximize your utility, should you a. eat more donuts and less cinnamon rolls? ******* b. eat less donuts and more cinnamon rolls? c. eat less donuts and less cinnamon rolls? 4. State whether the following statements are true or false. Due to the recent financial crisis, banks will be unlikely to offer credit to individuals and businesses in the near future. This will imply that a. Demand for real estate will increase False b. Demand for new cars will decrease True c. Demand for workers in the financial services industry will increase False d. Demand for loans offered by the Mafia will increase. True 5. Which one of the following has a more elastic demand?
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oldmidterm2-solved - Econ 142 Fall 2008 Professor Gautam...

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