Project 2 - Project 2 (Due Thursday December 1st at 1:03PM,...

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1 Project 2 (Due Thursday December 1 st at 1:03PM, Answer Key will be up by 2:00pm) {Note although this is due later than the tentative schedule Exam 3 will still be on December 6 th } Fill out and turn in only the scantron. Be sure to fill in the circles for your name. 100 points total You may work on this with other students but hand in your own scantron Note on the scantron 0=a, 1=b, 2=c, 3=d, 4=e, etc. 1. If the price elasticity of demand is -0.34 then this good is: A. A normal good B. An inferior good C. Price elastic D. Price inelastic E. This is impossible, it violates the law of demand 2. If the Income elasticity of a good is -0.3 this good is: A. A normal good B. An inferior good C. Price elastic D. Price inelastic E. This is impossible, it violates the law of demand 3. At Great America a one day pass is $59.99 while you can often find deals where a two day pass is $60.99 or you can purchase a season pass for $64.99 This best illustrates Great American understanding: A. the law of demand. B. the substitutability among goods. C. the law of diminishing marginal utility. D. the law of diminishing utility. E. that visits to Great America are an inferior good. F. that visits to Great America are an normal good. G. None of the above 4. If the Cross price elasticity of good A with regard to good B is equal to 1.45 then B is _______ for good A: A. A normal good B. An inferior good C. A Giffen D. A substitute E. A compliment F. This is impossible, it violates the law of demand 5. Order the following from most (demand) elastic to most inelastic: Tomatoes, Cigarettes, Camel Cigarettes. A. Tomatoes, Cigarettes, Camel Cigarettes B. Tomatoes, Camel Cigarettes, Cigarettes C. Cigarettes, Tomatoes, Camel Cigarettes D. Cigarettes, Camel Cigarettes, Tomatoes E. Camel Cigarettes, Cigarettes, Tomatoes F. Camel Cigarettes, Tomatoes, Cigarettes G. Cannot tell without more information
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2 Fill in the table and use it to answer questions 6-9 Product A: price=$5 Product B: price=$2.50 Units of Product Total Utility Marginal Utility Marginal Utility per Dollar Unit of Product Total Utility Marginal Utility Marginal Utility per Dollar 1 30 1 10 2 55 2 17.5 III 3 75 3 23.75 4 90 I 4 28.75 5 100 5 32.5 6 108 6 35 7 II 2 7 36.25 6. What goes in the blank marked with a I? A. 10 B. 20 C. 22.5 D. 60 E. None of the above 7. What goes in the blank marked with a II? A. 54 B. 106 C. 110 D. 116 E. None of the above 8. What goes in the blank marked with a III? A. 1 B. 2 C. 3 D. 4 E. None of the above 9. Suppose this consumer has $25 to spend. Which of the following combinations should she buy? A. 3 of A and 7 of B B. 2 of A and 6 of B C. 3 of A and 4 of B D. 3 of A and 6 of B E. 4 of A and 2 of B F. None of the above 10. The law of diminishing marginal utility says: A. Marginal utility is always positive B. Marginal utility is eventually negative C. Utility eventually declines D. Utility eventually increases by smaller amounts each time it increases E. Marginal utility per dollar spent is positive F. Marginal utility per dollar spent is negative
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This note was uploaded on 12/27/2011 for the course ECON 201 taught by Professor Staff during the Fall '08 term at Wisc Whitewater.

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Project 2 - Project 2 (Due Thursday December 1st at 1:03PM,...

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