10Practice+Exercises+for+Midterm+I+++more+questions+ - UCI...

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UCI- Winter 2011 Practice for Midterm I Prof El Hag Scenario 2.1: The demand for books is: Q d = 120 - P The supply of books is: Q s = 5P 1) Refer to Scenario 2.1. What is the equilibrium price of books? A) 5 B) 10 C) 15 D) 20 E) none of the above Answer: D 2) Refer to Scenario 2.1. What is the equilibrium quantity of books sold? A) 25 B) 50 C) 75 D) 100 E) none of the above Answer: D 3) The cross-price elasticity of demand for peanut butter with respect to the price of jelly is -0.3. If we expect the price of jelly to decline by 15%, what is the expected change in the quantity demanded for peanut butter? A) +15% B) +45% C) +4.5% D) -4.5% Answer: C 4) A simple linear demand function may be stated as Q = a - bP + cI where Q is quantity demanded, P is the product price, and I is consumer income. To compute an appropriate value for b, we can use observed values for Q and P and then set -b(P/Q) equal to the: A) income elasticity of demand. B) cross-price elasticity of demand. C) price elasticity of demand. D) price elasticity of supply. Answer: C
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5) If X and Y are perfect substitutes, which of the following assumptions about indifference curves is not satisfied? A) Completeness B) Transitivity C) More is preferred to less D) Diminishing MRS E) none of the above (All of the above assumptions are satisfied.) Answer: D 6) If a consumer is always indifferent between an additional one grapefruit or an additional two
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This note was uploaded on 01/17/2012 for the course ECON 100A taught by Professor Safarzadeh during the Fall '09 term at UC Irvine.

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10Practice+Exercises+for+Midterm+I+++more+questions+ - UCI...

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