Economics 420K (Microeconomic Theory)
First Midterm Examination
University of Texas at Austin, Fall 2009
YOUR NAME:
Instructions
•
Write your
name
in the space at the top of this page.
•
This is a closedbook examination.
A calculator will be useful.
•
There are six pages.
Check that you have all pages.
Answer each question in the
space provided.
•
The examination is worth 50 points.
Points are indicated in parentheses at the
beginning of each question.
•
Provide all the information asked for by each question.
No credit will be
given unless clearly demonstrated reasoning is shown.
Partial credit will be given
for work in the right direction.
Question 1 (18 points)
Consider the demand for movie tickets in a certain market.
Let P and Q
D
respectively
denote the price (in dollars) and quantity demanded of movie tickets.
Let T denote the
price of hometheater units, and let Y denote the income of consumers in this market.
Suppose that the demand function for movie tickets is:
Q
D
= 246 – 12P + 5T – 4Y .
(a) (2 points) According to this demand function, are movies and hometheater units
substitutes or complements? Explain briefly.
(b) (2 points) According to this demand function, are movie tickets a normal or an
inferior good? Explain briefly.
(c) (2 points) What is the crossprice elasticity of demand with respect to the price of
hometheater units if P=5, T=10 and Y=8?
1
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View Full Document(d) (3 points) Suppose that T=10 and Y=8.
Neatly sketch the above demand function
with quantity on the horizontal axis, showing slope and intercepts clearly.
(e) (3 points) Let Q
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 Spring '09
 WATSON
 Economics, Supply And Demand, Utility, Eduardo

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