MBA 504(global business and Economics)
1- The X-
corporation produces a good (called X) that is normal good. It’s competitor
Y-corporation makes a substitute good that it markets under the name “Y” Good Y
is an inferior good
a- How will
the demand for good X change if consumer incomes decrease?
o It will
decrease
o It will
stay the same
o It will
increase
b- How will
the demand for good Y change if consumer incomes increase?
o It will
stay the same
o It will
increase
o It will
decrease
c- How will
the demand for good X change if the price of good Y increases?
o It will
decrease
o It will
increase
o It will
stay the same
d- Is good Y
a lower quality product than good X?
o Yes- good
Y is a lower quality product than good X.
o No- good
Y is a higher quality product than good X.
o Not
necessarily- it could be higher or lower quality.
o No- good
Y is a product of identical quality to good X.
2- Good X is
produced in a competitive market using input A. explain what would happen to
the supply of good X in each of the following situations:
a- The price
of input A decreases
o It will
decrease
o It will
not change
o It will
increase
b- An excise
tax of $3 is imposed on good X
o It will
not change
o It will
decrease
o It will
increase
c- An ad
valorem tax of 7 percent is imposed on good X.
o It will
not change
o It will
decrease
o It will
increase
d- A
technological change reduces the cost of producing additional units of good X
o It will
not change
o It will
increase
o It will
decrease
3- Suppose
the supply function for product X is given by QXS= -30 +2PX -4PZ
a- How much
of product X is produced when PX= $600and PZ= $60
b- How much
of product X is produced when PX= $80 and PZ= $60?
c- Suppose
PZ= $60. Determine the supply function and inverse supply function for good X.
Graph the inverse supply function.
Supply function: QXS=
+ PX
Inverse supply function PX= +
QXS
4- The
demand for good X is given by
QXD= 6,000- (1/2)PX- PY+ 9PZ+(1/10)M
Research shows that the prices of related goods are given by
PY= $6,500 and PZ=$100, while the average income of individuals consuming this
product is M=$70.000
a- Indicate
whether goods Y and Z are substitutes or complements for good X
Good Y is :
Good Z is:
b- Is X an
inferior or a normal good?
Good X is:
c- How many
units of good X will be purchased when PX= $5230?
d- Determine
the demand function and inverse demand function for good X. Graph the demand
curve for good x.
5- The
demand curve for product x is given by Qxd = 300-2Px
a- Find the
inverse demand curve.
Px= – Qxd
b- How much
consumer surplus do consumers receive when PX= $45?
c- How much
consumer surplus do consumers receive when PX= $30?
d- In
general, what happens to the level of consumer surplus as the price of a good
falls?
The level of consumer surplus… as the price of a good falls.
6- Suppose
demand and supply are given by Qd=60 -P and QS =P-20
a- What are
the equilibrium quantity and price in this market?
Equilibrium quantity:
Equilibrium price: $
b- Determine
the quantity demanded, the quantity supplied, and the magnitude of the surplus
if a price floor of $50 is imposed in the market.
Quantity demanded:
Quantity supplied:
Surplus:
c- Determine
the quantity demanded, the quantity supplied, and the magnitude of the shortage
if a price ceiling of $32 is imposed in the market. Also, determine the full
economic price paid by consumers.
Quantity demanded:
Quantity supplied:
Shortage:
Full economic price: $
7- Suppose
demand and supply are given by
Qxd=14-()1/2)Px and Qxs =(1/4)Px-1
a- Determine
the equilibrium price and quantity. Show the equilibrium graphically.
Equilibrium price: $
Equilibrium quantity:
b- Suppose a
$12 excise tax is imposed on the good. Determine the new equilibriumprice and
quantity
Equilibrium price: $
Equilibrium quantity
c- How much
tax revenue does the government ear with the $12 tax?
8- The
supply curve for product X is given by QX5=520+20Px
a- Find the
inverse supply curve
P= + Q
b- How much
surplus do producers receive when Qx=400? when Qx= 1200?
When Qx= 400: $
When Qx= 1200: $
