Answer_Key_Exam_1_Version_A

Answer_Key_Exam_1_Version_A - Econ 302 Exam 1 McLeod Name _...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Econ 302 Exam 1 McLeod Name _____________________________ PSU ID# _________________________________ 1. (40 total points) Suppose you are hired by the Martin guitar company as an economic consultant. You estimate the demand for Martin guitars to be Q = 9,000 – 6P. a) (6 points) What price should Martin charge in order to maximize its revenue? P = $750 b) (6 points) Suppose the supply of Martin Guitars is given by Q = -3000 +9P. What is the equilibrium price and quantity of Martin guitars? P* = $800; Q* = 4200 c) (6 points)What is the price elasticity of demand at the equilibrium price and quantity? -4800/4200 = -24/21 = -8/7 = -1.143 d) (6 points) What is the price elasticity of supply at the equilibrium price and quantity? 7200/4200 = 72/42 = 36/21 = 12/7 = 1.714
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
consumers. e) (6 points) What price will consumers pay after the tax is levied? $804 f) (6 points) What proportion of the tax will be paid by the suppliers of Martin guitars? 40% or .4
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 6

Answer_Key_Exam_1_Version_A - Econ 302 Exam 1 McLeod Name _...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online