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Homework3_soln

# Homework3_soln - Economics 1A Professor Scott E Carrell...

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1 Economics 1A Professor Scott E. Carrell Homework 3 (Due in class Jan 30th) I. Multiple Choice Questions 1. Suppose Roger’s demand curve for movie tickets has a constant slope of -1. Suppose further that at a price of \$12, he will not buy any tickets. By comparing the price elasticity in the \$2 to \$4 price range with the elasticity in the \$8 to \$10 range, you can conclude that the elasticity is a) greater in the \$8 to \$10 range when the price rises but greater in the \$2 to \$4 range when the price falls. b) the same in both price ranges. c) greater in the \$8 to \$10 range. d) greater in the \$2 to \$4 range. 2. A leftward movement along the demand curve for cones (a complement to ice cream) might be caused by a) an increase in the price of the milk used to make ice cream. b) an increase in average household income. c) an increase in the temperatures causing people to desire more ice cream. d) none of the above 3. In a free market, 2000 patients each purchase an operation to receive an artificial heart at a price of \$500,000 per operation. Without the artificial heart, each patient would die. The government decides that this price is too high and imposes a maximum price of \$200,000. All else equal a) fewer patients will now die only if the demand curve is perfectly inelastic

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Homework3_soln - Economics 1A Professor Scott E Carrell...

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