# Test1, version A, answers - Ue St c'r L N ame Studento N A...

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Name: Ue &S tc'r) L Student No: Ar'SweRS LANGARA COLLEGE Economics 2296: Managerial Economics Test 1 Time allowed: 80 minutes February 17,2008 Total marks: 40 marks Answer the following eight questions in the space provided. Turn off all cell phones, pagers or anything else that might beep or that can be used to communicate with others. No books, notes, scrap paper or electronic devices allowed, with the exception of a simple, nonprogrammable, calculator. Explain your answers andshow your work. Question I (8 marks) Consider a competitive market for which the quantities demanded and supplied (per year) at various prices are given as follows: Qn= 28-0.2P Qs=8+0.2P Where the price is in dollars and the quantity is in millions. a) What are the equilibrium price and quantity? b) Calculate the price elasticity of demand when the price is \$40. c) Suppose the government sets a price ceiling of \$60. Will there be a shortage, and if so, how large will it be? &) S-+ 0p , Q-s "t-o"LP t r +O.zP f F*= lct LQ* = rF O l, tl" FrLcA. cn;L^q u -/ alo,rc lJ t'+t Q' rl \ * L'^o[hq a'4'1 !n^[ -- P Ft tR' , rl r-i ' n'n n() L(f"*'" / -flrL /hs

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Question 2 (6 marks) Suppose Lugy enjoypackets of licorice (X) and Jelly beans (Y) according to the function U(X,Y) :yr/zyt/z.
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