AEC 303 exam1

AEC 303 exam1 - AEC 303 Exam #1 February 23, 2009 1....

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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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For Questions 3-5, 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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AEC 303 exam1 - AEC 303 Exam #1 February 23, 2009 1....

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