e360_apks_Midterm1ReviewAns

# e360_apks_Midterm1ReviewAns - Answer Key to Mid Term 1...

This preview shows pages 1–6. Sign up to view the full content.

Answer Key to Mid Term 1 Review Andreas Pape, Kai Sun 1 a. Income = 1*a 1 +2*b 1 b. b MRS a,b =1 U 1 U 0 BC a Now her MRS=1, which is not equal to the price ratio (P a /P b =1/2) She can buy more apples and less banana to make herself better off.

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
Answer Key to Mid Term 1 Review Andreas Pape, Kai Sun 2. a. p=I-q=10-q (p 10) p 10 6 q 4 The above bold line is the demand curve. P=6 => q=4 b. e = -1*(p/q) At p=6 and q=4, e = -1*(6/4) = -3/2 => elastic Ö If price goes up by 10%, q will go up by more than 10%. c. CS = (1/2)*4*4 = 8
Answer Key to Mid Term 1 Review Andreas Pape, Kai Sun d. e = 1*(10/q) = 10/q At p=6 and q=4, e = 10/4 = 5/2 => elastic Ö If income goes up by 10%, q will go up by more than 10%.

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
Answer Key to Mid Term 1 Review Andreas Pape, Kai Sun 3. a. b. P=50 P=35 P=25 P=10 P=0 Tom 0 30 50 80 100 Dick 0 20 60 120 160 Harry 0 0 25 100 150 Total 0 50 135 300 410 c. P 50 40 30 Q H Q Q D Q T Q 100 150 160 d. For p>50, Q=0

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

## This note was uploaded on 09/18/2010 for the course ECON 360 taught by Professor Andreaspape during the Fall '08 term at Binghamton University.

### Page1 / 6

e360_apks_Midterm1ReviewAns - Answer Key to Mid Term 1...

This preview shows document pages 1 - 6. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online
{"found_math": false, "script_math_tex": 0, "script_math_asciimath": 0, "math_annotations": 0, "math_alttext": 0, "mathml": 0, "mathjax_tag": 0, "mathjax_inline_tex": 0, "mathjax_display_tex": 0, "mathjax_asciimath": 0, "img_math": 0, "codecogs_latex": 0, "wp_latex": 0, "mimetex.cgi": 0, "/images/math/codecogs": 0, "mathtex.cgi": 0, "katex": 0, "math-container": 0, "wp-katex-eq": 0, "align": 0, "equation": 0, "x-ck12": 0, "texerror": 0}