lab 1 - September 20-24 2010 Economics 203 Intermediate...

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September 20-24, 2010 Economics 203: Intermediate Microeconomics I Lab Exercise #1 Section 1: Test Your Understanding True or False? 1) The consumer almost always responds to an increase in a commodity’s price by reducing the amount of it he consumes 2) Since the market demand curve reflects what consumers want and are willing to pay for, when the market demand curve for a product shifts upward to the right, this indicates that consumers want more of the product at the existing price. 3) If a consumer buys three pieces of pizza August 1 when the price per slice is $1, and if she buys four pieces when the price per slice is 75 cents, a change in her demand for pizzas must have occurred between August 1 and September 3. Section 2: Applied Questions Question 1) The demand and supply functions for a product are determined to be: QP M P P F dr sI =− + + =+ + 525 7 0 35 20 350 4 150 65 . where P is price per unit of time M is consumer income P r is price of the good related in consumption P I is the price of an input used in producing the good and F is the number of firms in the industry.
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lab 1 - September 20-24 2010 Economics 203 Intermediate...

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