Download mock final

Mock Final Exam
Use the table below to answer questions 1 - 3
Combinations A
B
C
D
E
F
books
roses
0
10
20
30
40
50
100
90
75
55
30
0
roses
Consider the above production possibilities schedule of Leisureland questions 1-3.
1. Construct the production possibilities curve
110
105
100
95
90
85
80
75
70
65
60
55
50
45
40
35
30
25
20
15
10
5
0
0
10
20
30
40
50
60
books
2. Prove the law of increasing opportunity costs (calculate the marginal opportunity costs for
roses)
3. Indicate on the graph an increase in productivity in books’ production
Use the data for the demand schedule and the supply schedule to answer questions 5 - 7
Qd = 100 – 4P
Qs = 20 + P
4. Find the equilibrium price and equilibrium quantity
5. Draw the supply and the demand curves
40
38
36
34
32
30
28
26
24
22
20
18
16
14
12
10
8
6
4
2
0
0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60
6. Find the surplus or the shortage if the price were held to €8.00 by the government
Use the supply and demand curves to explain what would happen in the market for peppers a
result of each of the following
7.
8.
9.
10.
An increase in the buyers’ real income.
An decrease in the price of tomatoes (a substitute).
A ban on imports of roses.
Indicate at least two factors that might cause the changes at the market for shoes, described on
the graph below:
P
Q
A research of buyers’ behavior at the open market in the Town of Sun gives the following
information:
When the average income of buyers is €1500 and the price of rice is €2 and the price of
potatoes is €1 per kilo, people buy 120 kilos of rice and 60 kilos of potatoes a day.
When the average income of buyers is €1000, they buy only 100 kilos of rice and 40 kilos of
potatoes at the same price levels.
When the average income of buyers is €1500, but the price of rice rises to €2.20, people buy
100 kilos of rice and 80 kilos of potatoes a day at the same price of potatoes (€1)
11. Determine income elasticity of demand for rice.
12. Determine price elasticity of demand for rice.
13. Determine cross price elasticity of demand for potatoes as regard the price of rice. Are
they substitutes or complements?
14. Elasticity is often used to make predictions about changes in price or quantity demanded.
Assume that the price elasticity of demand for gasoline is 0.4. Calculate by how much prices
would have to be increased, if the government wanted to reduce purchases of gasoline by
20%.
Q
TU
soda soda
1
6
2
3
4
18
5
20
6
MU
Q
TU
MU
soda songs songs songs
1
10
5
2
8
4
3
24
4
28
5
2
1
6
31
15. Fill in the missing data
Use the above table to answer questions 17- 19
16. Suppose John has €10 to spend on soda and songs. What combination should he purchase in
order to maximize his utility if the price of soda is €1 and the price of songs is €2?
17. Suppose now that John’s income falls to €7, while the prices of both soda and songs are still
the same. What combination should he purchase now?
19. Suppose now that the price of songs falls to €1 while the price of soda has not changed, and
John’s income is still €7. What combination should he purchase now?
20. Any is willing to pay €7 for the first widget, €6 for the second, €5 for the third, €4 for the
fourth, €3 for the fifth widget, €2 for the sixth. How many widgets will she buy and what is
her consumer surplus, if the market price of widgets is €4?