practice 2009 midterm1

practice 2009 midterm1 - ARE100a Midterm 1 ARE100A...

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ARE100a Midterm 1 Oct 30, 2008 Sumner ARE100A INTERMEDIATE MICROECONOMICS: THEORY OF PRODUCTION AND CONSUMPTION FALL QUARTER 2009 Practice: Exam questions from previous years 1. California-produced peaches are bought in California where the demand curve is Q cc = a - 50P + Y c . They are also bought in the rest of the United States where the demand curve is Q cr = c - 150P + Y r . At a 2008 incomes Q cc = 400 and Q cr = 600 for the price of $2. What is the overall elasticity of demand facing the California peach producing industry? Explain. 2. You spend you income on food and college courses. The income elasticity of food is 0.4 and the share of income spent on food 0.5. The substitution only, real income constant, compensated demand elasticity for course is -1.0. You initially planned to purchase 10 courses this year. a. If your income goes up by 25 percent how many more courses would you purchase? Explain.
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