AEC 303
Exam #1
February 23, 2009
1.
Recently, a downtown movie theater reduced its ticket price on Monday evenings
from $5 to $2 and (everything else staying constant) average ticket sales on
Monday evening rose from 100 to 400.
a.
Calculate the
price elasticity of demand
.
What kind of demand is it
(Elastic or Inelastic)?
b.
The sales on Friday nights fell from 900 to 600.
Calculate the
cross price
elasticity of demand.
Are the Monday and Friday nights tickets
complements or substitutes?
2.
Evaluate if the following statement is true or false.
Consider a rational consumer
that consumes two different goods, X and Y. Suppose that the price of good X
decreases. Then the quantity consumed of good X increases only if X is a normal
good.
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View Full DocumentFor Questions 35, refer to the graph below.
3. In the graph above, Amy must decide how to allocate her budget between hot dogs and
hamburgers. Which one of the following combinations is unaffordable to Amy?
a. 3 hot dogs and 2 hamburgers
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 Fall '08
 Staff
 Supply And Demand, hot dogs

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