Extra Questions

# Extra Questions - b Campus security has a bike check in...

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Extra Questions: 1) The price elasticity of gasoline supply in the U.S. is 0.4. If the price of gasoline rises by 8%, what is the expected change in the quantity of gasoline supplied in the U.S.? 2) Professors Adams and Brown make up the entire demand side of the market for summer research assistants in the economics department. If Adam’s demand curve is P = 60 – 2Q A and Brown’s is P = 50 – Q B , where Q A and Q B are the hours demanded by Adams and Brown, respectively, what is the market demand for research hours in the economics department? 3) Your bike is worth \$100 and if you park it outside at school there is a 25% chance that it will be stolen. Your utility function for money is U = (money) 2 . a. Are you risk averse, a risk lover, or risk neutral? Explain.
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Unformatted text preview: b. Campus security has a bike check in that will guard your bike for \$15 so there will be no risk of loss. Do you take the campus security deal? Explain. c. What is the maximum you would pay security to check in your bike? d. Next suppose your utility function for money is U = 100(money). Are you risk averse, a risk lover, or risk neutral? Explain. 4) Suppose that the demand for crossing the Golden Gate Bridge is given by the equation Q = 10,000 - 1000P. a. If the toll (P) is \$2, how much revenue is collected? b. What is the price elasticity of demand at this point? c. Could the bridge authorities increase their revenues by raising or lowering their price?...
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