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Econ 100B

Practice Questions
Midterm 1
Summer 2010

Multiple Choice
Identify the choice that best completes the statement or answers the question.

____ 1. Sir Plus has a demand function for mead that is given by the equation D(p) = 100 – p. If the price of mead is
$60, how much is Sir Plus’s net consumer’s surplus?
a. $40
b. $800
c. $1,600
d. $400
e. $3,900

____ 2. Pablo’s utility function is U(x,y) = x + 10y – (y2 / 2), where x is the number of x’s he consumes per week and
y is the number of y’s he consumes per week. Pablo has $200 a week to spend. The price of x is $1. The price
of y is currently $5 per unit. Pablo has received an invitation to join a club devoted to the consumption of y. If
he joins the club, Pablo can get a discount on the purchase of y. If he belonged to the club, he could buy y for
$1 a unit. How much is the most Pablo would be willing to pay to join this club?
a. $8
b. $28
c. $36
d. $56
e. None of the above.

____ 3. The demand function is described by the equation q(p) = 30 – ( ). The inverse demand function is
described by the equation
a. q(p) = 30 – 3p.
b. p(q) = 90 – 3q.
c. q(p) =
d. p(q) = –
e. p(q) = 30 – .

____ 4. If the demand function for tickets to a play is q = 3,800 – 95p, at what price will total revenue be maximized?
a. $80
b. $40
c. $20
d. $10
e. none of the above.
____ 5. An economy has 100 consumers of type 1 and 200 consumers of type 2. If the price of the good is less than
$10, then each type 1 consumer demands 10 – p units of the good; otherwise each type 1 demands zero. If the
price of the good is less than 8, then each type 2 demands 24 – 3p; otherwise each type 2 demands zero. If the
price of the good is 6, then the total amount of the good demanded will be
a. 1,600 units.
b. 1,800 units.
c. 2,000 units.
d. 420 units.
e. 1,200 units.

____ 6. Harry’s demand function for blueberries is x = 20 – p, where p is the price and x is the quantity demanded. If
the price of blueberries is 6, then what is Harry’s price elasticity of demand for blueberries?
a. –
b. –
c. –2
d. –
e. none of the above.

____ 7. The demand for drangles is given by D(p) = (p + 1)–2, where p is the price of drangles. If the price of drangles
is $19, then the price elasticity of demand for drangles is
a. –3.80
b. –7.60
c. –5.70
d. –3.80
e. –1.90

____ 8. The demand for voice mail is Q = 1,000 – 150P + 20I. Assume that per capita disposable income I is $900. At
a price P of $40, the income elasticity of demand is
a. 2.
b. 4.
c. 1.0.
d. 20.
e. 1.38.

____ 9. The demand for pickles is given by p = 131 – 2q and the supply is given by p = 5 + 7q. What is the
equilibrium quantity?
a. 11
b. 14
c. 19
d. 103
e. None of the above.

____ 10. The inverse demand function for mangos is defined by the equation p = 91 – 5q, where q is the number of
crates that are sold. The inverse supply function is defined by p = 3 + 6q. In the past there was no tax on
mangos but now a tax of $44 per crate has been imposed. What are the quantities produced before and after
the tax was imposed?
a. 5 crates before and 5 crates after
b. 16 crates before and 9 crates after
c. 14 crates before and 7 crates after
d. 8 crates before and 4 crates after
e. None of the above.
____ 11. The demand function for rental apartments is q = 960 – 7p and the supply function is q = 160 + 3p. The
government makes it illegal to charge a rent higher than $35. How much excess demand will there be?
a. 149
b. 450
c. 364
d. 726
e. 245

____ 12. In a crowded city far away, the civic authorities decided that rents were too high. The long-run supply
function of two-room rental apartments was given by q = 14 + 5p, and the long-run demand function was
given by q = 329 – 5p, where p is the rental rate in crowns per week. The authorities made it illegal to rent an
apartment for more than 25 crowns per week. To avoid a housing shortage, the authorities agreed to pay
landlords enough of a subsidy to make supply equal to demand. How much would the weekly subsidy per
apartment have to be to eliminate excess demand at the ceiling price?
a. 6.50 crowns
b. 10 crowns
c. 13 crowns
d. 26 crowns
e. 19.50 crowns

____ 13. Daily demand for gasoline at Billy-Bob’s Mobile Station is described by Q = 2890 – 200p, where Q are
gallons of gasoline sold and p is the price in dollars. Billy-Bob’s supply is Q = 776 + 1,500p. Suppose the
state government places a tax of 20 cents on every gallon of gasoline sold. What is the deadweight loss
resulting from this tax?
a. 3.53 dollars
b. 3.11 dollars
c. 0.42 dollars
d. 96.12 dollars
e. 34.59 dollars

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