ECON 5203
Managerial Economics
2010 Spring
Dr. May
Name ___________________________
ID No.
__________________________
Use the following generalized linear demand relation to answer questions 1 through 5:
680
9
0.006
4
d
R
Q
P
M
P
=

+

where
M
is income and
R
P
is the price of a related good,
R
.
1.
From this relation it is apparent that the good is:
a.
an inferior good
b.
a substitute for good
R
c.
a normal good
d.
a complement for good
R
e.
both
c
and
d
2.
If
M
= $15,000 and
R
P
= $20, the demand function is
a.
690
9
d
P
Q
=

.
b.
690
9
d
Q
P
=

.
c.
680
9
d
Q
P
=

.
d.
680
9
d
P
Q
=

.
e.
800 19
d
Q
P
=

.
3.
If
M
= $15,000 and
R
P
= $20 and the supply function is
30
3
s
Q
P
=
+
, equilibrium price
and quantity are, respectively,
a.
P
= $55 and
Q
= 195.
b.
P
= $6 and
Q
= 38.
c.
P
= $12 and
Q
= 200.
d.
P
= $50 and
Q
= 170.
e.
P
= $40 and
Q
= 250.
4.
If
M
= $15,000 and
R
P
= $20 and the supply function is
30
3
s
Q
P
=
+
, then, when the
price of the good is $60,
a.
there is a shortage of 60 units of the good.
b.
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 Spring '10
 beth
 Supply And Demand, $2, $5, $6, $15, $11

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