short answers

Question 1

A market consists of two individuals : A and B

The demand equation for A is 4P = 16 - Q

The demand equation for B is 2P = 20 - Q

The market demand equation is

None of these is correct
36 - 6P
14 - 0.75Q
18 - 3P

Answer 1

36 - 6P

Question 2

Price increases from $3.00 to $4.00 and quantity demanded decrease from 110 to 90 units. The price elasticity of demand is -0.5.

True
False

Answer 2

False 

Question 3

The price of apples rises from $1.00 to $1.50 per pound. As a result, the quantity of oranges demanded rises from 8000 to 9500. Based on the above, these two goods are substitutes.

True
False

Answer 3

True 

Question 4

Suppose a person’s income rises from $20,000 TO $22,000 and the quantity of hamburger he buys each week falls from 2 pounds to 1 pound. Based on the above, we can say that

hamburger is an inferior good

None of these statements is correct

hamburger is a luxury good

hamburger is a normal good

Answer 4

hamburger is an inferior good 

Question 5

As the price of margarine increases from $1.00 to $2.00 per pound, consumption of butter increase from 11 Million to 13 million,. What is the cross elasticity?

0.125

None of these is correct

0.250

0.500

Answer 5

0.250 

Question 6

As the price of margarine increases from $1.00 to $2.00, consumption of butter increases from 11 Million to 13 Million pounds, there the cross price elasticity is 0.8.

True
False

Answer 6

False

Question 7

An industry has four firms with ten percent market shares and 4 firms with fifteen percent market shares. What is the HHI for that industry?

None of the above is correct
1350
1500
2400

Answer 7

None of the above is correct 

Question 8

An industry has 5 firms with 10 percent market shares and one firm with a 50 percent market share. The HHI for this industry is 3000.

True
False

Answer 8

True 

Question 9

If an industry consists of eight firms with equal market shares, the HHI would be 1200.

True
False

Answer 9

False

Question 10

If TC is 100 - 2Q2 + 5Q3 (one hundred minus two Q squared plus five Q cubed), then MC is 4Q + 15Q2 (four Q plus fifteen Q squared).

True
False

Answer 10

False

Question 11

If Total Cost is given by TC = 10 -Q + 0.1Q2 (ten minus Q plus zero point one Q squared) and Q = 4, then

marginal cost is -1.

Average fixed cost is -0.6

None of the above

Average fixed cost is 2.5

Answer 11

Average fixed cost is 2.5