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Unformatted text preview: Econ 251, Maymester 2009, Exam #1 Please record all of your answers on the scantron or the provided answer sheet. 1. The demand for the energy drinks is given by the function: D Q =20-5P. What is the marginal benefit of the 5 th unit of chocolate? a. $1 b. $3 c. $10 d.-$5 2. Which of the following would you expect to decrease the demand for Oreo cookies? a. An increase in the price of Oreo cookies. b. An increase in the price of milk, a complement in consumption of Oreo cookies. c. An increase in income, assuming that Oreos are a normal good. d. An increase in the supply of Oreos. 3. Consider the market for beef. The price of feed used in raising cows rises at the same time that the price of A-1 steak sauce, a complement in the consumption of corn, decreases. As a result, we would expect the equilibrium price for beef to ________, and the equilibrium quantity of beef to __________. a. increase, be indeterminate b. increase, increase c. increase, decrease d. be indeterminate, decrease 4. If the market demand for iPods can be represented by the equation Q d = -3P + 30, and market supply can be represented by the equation Q s = 2P 20, what is the price elasticity of demand when the price rises from $6 to $9? a. 3 b. 1/3 = .33 c. 9 d. 1/9 = 0.11 5. Using your answer from Question 4, would you say that at an average price of $7.50 that demand is_________. a. Elastic b. Inelastic c. Unit Elastic d. None of the Above 6. Using the equations from Question 4, Q d = -3P + 30 and Q s = 2P 20 what is the equilibrium quantity what is Q*? a. 0 b. 1 c. 5 d. 9 Econ 251, Maymester 2009, Exam #1 Please record all of your answers on the scantron or the provided answer sheet. 7. If Demand decreases in the market for iPods (Questions 4-7) which of the following is potentially a new equilibrium. a. (Q*, P*) = (-5, $5) b. (Q*, P*) = (5, $10) c. (Q*, P*) = (-5, $15) d. None of the Above 8. Based on the graph below, at a price of $100 per unit, which of the following is true? a. There is a surplus of 30 units of the good. b. There is a shortage of 30 units of the good. c. The demand curve shifts rightward. d. The market is NOT in equilibrium....
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- Summer '08