Midterm 1 Review Questions
Midterm 1 Review Questions
1. What is the inverse demand of QD = 20 – 4P?
2. If the demand function is QD = 20 – 4P and the government imposes a tax of $2 on consumers. What is the new demand curve?
3. What does the supply curve look like when there is a max quantity that can be supplied?
4. In the market for pizza what will happen if
a. Worker’s wages increase.
b. Income increases
c. The price of cheese decreases.
5. The inverse demand for movies is P = 8 – (1/2)Q. Graph the demand curve. Show what happens when the price for movies declines from $6 to $3.
6. In the market for OJ what would cause the supply for OJ to increase? Show what happens to the market equilibrium when supply increases.
7. In the market for OJ what would cause the demand for OJ to increase? Show what happens to the market equilibrium when demand increases.
8. Show on a graph what happens when there is a price ceiling.
9. If QD = 20 – 3P, what is the price elasticity of demand at P = 4?
10. If QD = 20 – 3P and QS = 10 + 2P, what is the market equilibrium?
11. Which of the following pairs of goods are complements and which are substitutes?
a. A novel and a gossip magazine
b. A camera and film
c. A Sony DVD player and a Panasonic DVD player
12. Peanut Butter and Jelly are perfect complements. Draw an indifference map for the two goods, where you consume 2 jars of jelly for each jar of peanut butter.
13. Draw a budget constraint and an indifference curve for Peanut Butter and Jelly. ( The indifference curve should take the same shape as the indifference curves in the previous question) Label the optimal bundle.
14. If the goods are substitutes then the cross price elasticity is positive or negative?
15. What does the marginal rate of substitution mean?
16. Draw a budget constraint and indifference map for Beer and Pizza, label the optimal bundle.
17. Ben has a monthly income of $1000. He buys DVDs that cost $20 and videogames that cost $50. (Draw each part on the same graph;
1. What is the inverse demand of QD = 20 – 4P?
2. If the demand function is QD = 20 – 4P and the government imposes a tax of $2 on consumers. What is the new demand curve?
3. What does the supply curve look like when there is a max quantity that can be supplied?
4. In the market for pizza what will happen if
a. Worker’s wages increase.
b. Income increases
c. The price of cheese decreases.
5. The inverse demand for movies is P = 8 – (1/2)Q. Graph the demand curve. Show what happens when the price for movies declines from $6 to $3.
6. In the market for OJ what would cause the supply for OJ to increase? Show what happens to the market equilibrium when supply increases.
7. In the market for OJ what would cause the demand for OJ to increase? Show what happens to the market equilibrium when demand increases.
8. Show on a graph what happens when there is a price ceiling.
9. If QD = 20 – 3P, what is the price elasticity of demand at P = 4?
10. If QD = 20 – 3P and QS = 10 + 2P, what is the market equilibrium?
11. Which of the following pairs of goods are complements and which are substitutes?
a. A novel and a gossip magazine
b. A camera and film
c. A Sony DVD player and a Panasonic DVD player
12. Peanut Butter and Jelly are perfect complements. Draw an indifference map for the two goods, where you consume 2 jars of jelly for each jar of peanut butter.
13. Draw a budget constraint and an indifference curve for Peanut Butter and Jelly. ( The indifference curve should take the same shape as the indifference curves in the previous question) Label the optimal bundle.
14. If the goods are substitutes then the cross price elasticity is positive or negative?
15. What does the marginal rate of substitution mean?
16. Draw a budget constraint and indifference map for Beer and Pizza, label the optimal bundle.
17. Ben has a monthly income of $1000. He buys DVDs that cost $20 and videogames that cost $50. (Draw each part on the same graph;