2010ps1

2010ps1 - BUAD 351 Economic Analysis for Business Decisions...

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BUAD 351 - Economic Analysis for Business Decisions Homework 1 due: Thu 01/28/2010 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 wheat be given by Q d wheat = 20 P wheat and the supply of wheat be given by Q s wheat = P wheat 4 : The equilibrium in the wheat market is then a. Q = 8 ;P = 12 b. Q = 12 ;P = 12 c. Q = 12 ;P = 8 d. Q = 8 ;P = 8 3. Let the demand for wheat be given by Q d wheat = 20 P wheat 1 5 I + 1 5 P corn : The coe¢ cient on the price of corn tells you that wheat and corn are a. complements b. substitutes c. unrelated goods d. none of the above 4. Given the demand curve above, wheat is a. a normal good b. an inferior good 5. Refer to the demand curve in question 3. At P wheat = 6 ; I = 25 and P corn = 5 ; the (own- price) elasticity of demand for wheat is a. 3 = 5 b. 5 = 3 c. 1 d. 3 = 8 1
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6. Refer to the demand curve in question 3. At
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2010ps1 - BUAD 351 Economic Analysis for Business Decisions...

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