When the price of fresh fish increases 10%, quantity demanded is unchanged. The price elasticity of demand for fresh fish is Your answer: perfectly inelastic b perfectly elastic c inelastic d unitary elastic

1. Compute the price elasticity of demand if price increases from $10 to $12 and quantity demanded falls from 600 to 400. Use the value obtained and a specific example to determine whether price must be increased or decreased to increase total revenue. Explain why. Note: Explain only how to increase total revenue, not decrease it.

1. An inferior good has a ______________________.

1. Positive price elasticity of demand b) Negative price elasticity of demand c) Negative Income elasticity of demand d) Positive income elasticity of demand

2. A movement down the demand curve is a(n):

1. A decrease in quantity demanded b) an increase in quantity demanded c) an increase in demand d) a decrease in demand

3. When a market is at equilibrium,

1. There are no shortages or surpluses b) the price is a fair price c) all consumers can afford the good d) all the above are correct

4. If the demand for peanuts increases,

1. The quantity supplied of peanuts will decrease b) the supply of peanuts will decrease
2. The supply of peanuts will increase d) none of the above are correct

5. A change in a firm’s input costs affect:

1. Supply b) demand c) both supply and demand d) neither supply nor demand

6. A market price will exceed its equilibrium price if the government institutes a:

1. Price floor b) Price ceiling c) an asymmetric target price d) all the above

7. An example of a price ceiling is:

1. Food stamps b) education scholarships c) rent control d) agricultural subsidies

8. “All else held constant” is stated with the phrase:

1. E pluribus Unum b) De gustibus non est disputadum c) ceteris paribus d) coitus acetum

9. The price elasticity of supply for a product must be:

1. Negative b) positive c) greater than one d) smaller than the price elasticity of demand

10. If the price elasticity of demand is perfectly inelastic, the demand curve will be:

1. Vertical b) Horizontal c) Positively Sloped d) Negatively Sloped

11. A price ceiling above a market’s equilibrium price:

1. Creates a shortage b) creates a surplus c) does nothing d) performs price discovery

12. If there is greater quantity supplied than there is quantity demanded at a given price in a market, the price will: a) rise b) fall c) remain the same d) inadequate information to say

13. If a product has a high price elasticity of demand and a high-income elasticity of demand, the product is likely a: a) necessity b) substitute c) luxury d) small solar powered flashlight

14. A highly elastic price elasticity of demand generally means that a good is:

1. Necessary b) very substitutable c) inexpensive d) rarely bought and sold

15. A pair of goods are substitutes if their cross-price elasticity of demand is:

1. Positive b) negative c) zero d) one

When would it pay a seller to use group price discrimination AND nonlinear price discrimination at the same time? Give me 3 real-life examples. Include in your answer the definitions of group price and nonlinear discriminations. Include as much information as possible to answer the question.

Let's look at the price of gasoline. What affects its price and how does that affect the sales of this product? If the price went up or down would that affect demand?

4. Suppose that the price per unit of input K is 1 euro, the price per unit of input C is 12 euros and the price per unit of input L is 3 euros a) What is the minimum cost of producing 40 units of output y for the firm if the firm’s production function is Y =min {K;4C}+ L/2 ?

The Government is planning a policy, which envisages simultaneously the following two policies: 1)

introduction of a tax of 1 euro per unit of input L, and 2) introduction of a subsidy of 2 euros per unit of

input C. Find and explain briefly, how would the planned policy affect this firm. Would it affect the

minimum cost of production of 40 units of output? Would it affect the technology used? Provide

calculations for proof.

An online news site earns revenue by selling subscriptions at price pS and ads at price pA. For simplicity, assume the site has zero marginal cost. Consumer demand for subscriptions is given by:

Qs=1-Ps

Demand from advertisers for ad-space depends on the number of subscribers though:

Qa=Qs(1-Pa)

What price should the firm charge for subscriptions and ads, considered jointly, to maximize profits?

Calculate the Dollar Price quotes of the Treasury Securities in the adjacent table

Complete the following table. Given the premium, strike price and futures price, is the futures contract in or out of the money? How much is the intrinsic value? How much is the time value? Please show your work.