E301F09 Old MT1 Key

# E301F09 Old MT1 Key - Department of Economics LeBow College...

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Department of Economics LeBow College of Business Economics 301 Drexel University Professor Stehr Old Midterm I Suggested Answers The exam contains questions worth a total of 100 points and is worth 24% of your class grade. Palm pilots, cell phone calculators, and regular calculators are not permitted. Answer all questions, use graphs where appropriate, and be clear and complete in your explanations. Write your answers in the space provided. Your Name ________ Suggested Answers _____________________________________ 1. Suppose demand and supply of pears is given by the equations below. Qd = 30 – 2P, if P <= 15. Qs = 2P – 6, if P >= 3. a) Find the equilibrium price and quantity. (4 points) b) Find the elasticity of supply at the equilibrium. (4 points) 1

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2. Draw indifference curves to represent the preferences described below. Use an arrow to indicate the direction in which the individual will be better off. (Not all indifference curves will be convex.) a) Greg has one left foot and one right foot. Draw indifference curves that describe his preferences for left shoes and right shoes. (4 points) b) Susan always thinks that two pancakes are just as good one waffle no matter how many of each she has. (4 points) 2
c) Captain Caveman consumes food and clothing. The less clothing he has, the more additional food he has to have to be just as well off as he was before. (4 points) d) Craig is addicted to the online game “World of Warcraft III”. The more he plays, the more

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E301F09 Old MT1 Key - Department of Economics LeBow College...

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