Question

17. Suppose you receive a 25% increase in your income. As a result of this, you...

17. Suppose you receive a 25% increase in your income. As a result of this, you double the amount of music festivals you attend each summer. Which of the following is correct?

Multiple Choice

a.Music festivals are a normal good and income elasticity of demand equals 4.

b.Music festivals are an inferior good and income elasticity of demand equals -4.

c.Music festivals are a normal good and income elasticity of demand equals 0.25.

d.Music festivals are an inferior good and income elasticity of demand equals -0.25.

18. Suppose the cross-price elasticity of demand between Good X and Good Y is -0.75 and the income-elasticity of demand between Good Y and Good Z is 1.25. In this example, Goods X and Y are _________ and Goods Y and Z are __________.

Multiple Choice

a.substitutes; inferior

b.complements; inferior

c.substitutes; normal

d.complements; normal.

33.Louisa works for a hedge fund company. Her wage increased from $30 per hour to $40 per hour. She can work up to 50 hours each week. Louisa is currently working 10 hours per week and receives 84 utils for the leisure time she enjoys. If she decides to work 20 hours instead, her total utility of having only 30 hours of leisure is 71 utils. Her total utility from the income she receives working 10 hours per week is 74 utils and her total utility from the income she receives working 20 hours per week is 110 utils. If she decides to work 30 hours then her marginal utility gain from having more income will now be:

Multiple Choice

a.74.

b.36.

c.13.

d.12.

34.Aleah is an electrical engineer. Her wage increased from $30 per hour to $40 per hour. She can work up to 50 hours each week. Aleah is currently working 30 hours per week and receives 54 utils for the leisure time she enjoys. If she decides to work 20 hours instead, her total utility of having 30 hours of leisure is 73 utils. Her total utility from the income she receives working 30 hours per week is 122 utils and her total utility from the income she receives working 20 hours per week is 113 utils. If she decides to work 30 hours, her marginal utility loss from having less income is:

Multiple Choice

a.9.

b.23.

c.19.

d.100.

45. Consider the following cost information for the production of volleyballs. Suppose variable cost = $24; total cost = $54; average variable cost = $12; average fixed cost = $15; and output = 2. What is the fixed cost?

Multiple Choice

a.$30

b.$54

c.$15

d.$10

46. Consider the following cost information for the production of volleyballs. Suppose variable cost = $24; average variable cost = $12; average fixed cost = $15; and output = 2. What is the total cost?

Multiple Choice

A.$54

b.$30

c.$15

d.$10

47. Consider the following cost information for the production of volleyballs. Suppose total cost = $54; average variable cost = $12; average fixed cost = $15; and output = 2. What is the variable cost?

Multiple Choice

a.$24

b.$30

c.$54

d.$10

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Homework Answers

Answer #1

1) Option A is correct because with increase in income expenditure on music festival is also increasing that is there exist a positive relationship between income and Music festival demand

income elasticity = 100%/25% = 4

2) Option D is correct because cross price elasticity shows that how demand of one good changes when prices of another good changes , here it is negative which shows that goods are complementary and Good y and Good z are normal good because of positive income elasticity .

3) option B is correct

MU = 110-74 =36

5) option A is correct

TVC = TC-TFC

  = 54-24

6) Option A is correct

TFC = AFC*Q =15*2 = 30

TC = TVC+TFC = 30+24=54

7) Option A is correct

TVC = AVC*Q = 12*2 = 24

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