midreview

# midreview - Review for midterm Tuesday, July 5 QUESTION 1...

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Review for midterm Tuesday, July 5

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QUESTION 1 (aggregate demand) Suppose that, in some market, there are 5 potential buyers, each with the same marginal benefit function, MB i = 6 Q i , and there are 5 potential sellers, each with the same marginal cost function, MC i = 2 + Q i . Which of the following gives the correct market demand function (the combined demand of all 5 buyers)? A) Q D = 90 7P B) Q D = 10 P C) Q D = 30 5P D) Q D = 40 4P E) Q D = 20 8P
answer to question 1 Suppose that, in some market, there are 5 potential buyers, each with the same marginal benefit function, MB i = 6 Q i , and there are 5 potential sellers, each with the same marginal cost function, MC i = 2 + Q i . Which of the following gives the correct market demand function (the combined demand of all 5 buyers)? A) Q D = 90 7P B) Q D = 10 P C) Q D = 30 5P D) Q D = 40 4P E) Q D = 20 8P

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QUESTION 2 (aggregate supply) Suppose that, in some market, there are 5 potential buyers, each with the same marginal benefit function, MB i = 6 Q i , and there are 5 potential sellers, each with the same marginal cost function, MC i = 2 + Q i . Which of the following gives the correct market supply function (the combined supply of all 5 sellers)? A) Q S = 4P 10 B) Q S = 3P 2 C) Q S = 5P Q D) Q S = 5P 10 E) Q S = 4P + 10
answer to question 2 Suppose that, in some market, there are 5 potential buyers, each with the same marginal benefit function, MB i = 6 Q i , and there are 5 potential sellers, each with the same marginal cost function, MC i = 2 + Q i . Which of the following gives the correct market supply function (the combined demand of all 5 sellers)? A) Q S = 4P 10 B) Q S = 3P 2 C) Q S = 5P Q D) Q S = 5P 10 E) Q S = 4P + 10

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QUESTION 3 (equilibrium price) 5 buyers, each with MB i = 6 Q i 5 sellers, each with MC i = 2 + Q i Q D = 30 5P Q S = 5P 10 What is the price of the good in market equilibrium? A) 4 B) 3 C) 5 D) 7 E) 1
answer to question 3 5 buyers, each with MB i = 6 Q i 5 sellers, each with MC i = 2 + Q i Q D = 30 5P Q S = 5P 10 P = 4 A) 4 B) 3 C) 5 D) 7 E) 1

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QUESTION 4 (consumer surplus) 5 buyers, each with MB i = 6 Q i 5 sellers, each with MC i = 2 + Q i Q D = 30 5P Q S = 5P 10 When P = 4, how much surplus does each consumer get? A) 1 B) 3 C) 4 D) 5 E) 2
answer to question 4 5 buyers, each with MB i = 6 Q i 5 sellers, each with MC i = 2 + Q i Q D = 30 5P Q S = 5P 10 CS i = (.5)(2)(2) = 2 A) 1 B) 3 C) 4 D) 5 E) 2

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QUESTION 5 (consumer surplus) 5 buyers, each with MB i = 6 Q i 5 sellers, each with MC i = 2 + Q i Q D = 30 5P Q S = 5P 10 When P = 4, how much consumer surplus is there in total?
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## This note was uploaded on 08/03/2010 for the course ECON 1 taught by Professor Bergstrom during the Summer '07 term at UCSB.

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midreview - Review for midterm Tuesday, July 5 QUESTION 1...

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