Pbms%20till%20Monopoly - Econ 302 Trial Problems for Demand...

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Econ 302 Trial Problems for Demand, Production, CS, Competition and Monopoly Several problems may be harder and you may have to come back to them Answers for each section are given at the end As long as the material is the same, I am not obligated to ask questions “like these” on an exam; on the other hand, I may repeat some minor variant of these questions. The point is, focus on learning the concepts and the material, not specific problems. I will post corrections if any come to my attention. Please check Subscripts and superscripts often follow directly, thus x 2 looks like x2. Please adjust your reading accordingly. 1. The demand curve for a good is given by p= 140-8q where p is the price and q is the quantity of the good. Suppose that the number of consumers in the economy doubles, with a "clone" appearing for each consumer, who has exactly the same demand curve as the original consumer. The demand curve for the doubled economy is described by: A. p=280-8q. B. p=280-16q. C. p=140-16q. D. p=140-4q. E. p=70-4q. 2. The demand function is described by the equation q(p)=210-p/4. The inverse demand function is described by: A. q(p)=210-4p. B. p(q)=840-4q. C. q(p)=1/(210-p/4). D. p(q)=1/210-q/4. E. p(q)=210-q/4. 3. If at current prices, the demand for a good is price-elastic, then for movements along the demand curve: A. increasing the price will increase revenue. B. decreasing the price will decrease revenue. C. increasing the quantity sold will increase revenue. D. increasing the quantity sold will decrease revenue. E. More than one of the above statements are true. 4. T F 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<500. 5. Given his current income, Rico's demand for bagels is related to the price of bagels by the equation, Q=160- 20P. 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: A. Q=160-20P. B. Q=640-80P. C. Q=160-40P. D. Q=320-40P E. Q=320-20P.
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6. T F If a price changes, then changes in consumption at the intensive margin are changes that happen because consumers alter the amounts that they consume, but do not either stop consuming or start consuming the good. 7. T F If the demand curve is a linear function of price, then the price elasticity of demand is the same at all prices. 8. T F 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 one. 9.
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This note was uploaded on 08/25/2009 for the course ECON 302 taught by Professor Toossi during the Spring '08 term at University of Illinois at Urbana–Champaign.

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Pbms%20till%20Monopoly - Econ 302 Trial Problems for Demand...

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