{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

ARE100A+Q1+answer+2009

ARE100A+Q1+answer+2009 - 2 Draw a representative budget...

Info icon This preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
ARE100A INTERMEDIATE MICROECONOMICS: THEORY OF PRODUCTION AND CONSUMPTION FALL QUARTER 2009 Quiz 1 Answer guide Thursday October 8 1. Consider the effect on price of a $20 per ton subsidy on peaches when the supply elasticity is 2.0 and the demand is completely inelastic. Demand is vertical so quantity does not change. Subsidy shift down effective supply curve (lower net cost of suppliers). The price to buyers falls by the full $20 per ton. The supply elasticity is irrelevant.
Image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 2. Draw a representative budget constraint for a person with a budget of 10 hours of free time per week who only reads books or listens to recorded symphonies. Reading takes 5 hours per book and listening takes one hour per symphony. The budget line is a straight line between the two points 10/1 on the symphony axis and 10/5 on the books axis. If symphonies are on the vertical axis the line goes from 10 to 2 and the slope is equal to -5....
View Full Document

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern