04-Daytime2023ME.PP01.q

MGRECON - Fall 2023 ⋄ Practice Problem Set 1 Questions 1 - 2 pertain to the following game The following figure shows Michael’s monthly demand for “Bubbly” mineral water boxes. (MWTP = Marginal Willingness To Pay.) Q MWTP 1 60 2 45 3 40 4 38 5 35 6 30 7 12 8 0 2. Michael’s demand for “Bubbly” water shifts as indicated in the table below Q Old MWTP New MWTP 1 $60 $42 2 $45 $35 3 $40 $30 4 $38 $26 5 $35 $20 6 $30 $10 7 $12 $0 8 $0 $0 This shift could have been caused by: A. a decrease of the price of a similar brand of mineral water B. an increase of the price of Bubbly water C. a new study suggesting that Bubbly water has special anti-aging properties D. none of the above statements page 3 of 20

MGRECON - Fall 2023 ⋄ Practice Problem Set 1 5. Which of the following pairs of goods are NOT complements for most people? A. Hockey sticks and hockey pucks B. Computer CPUs and computer monitors C. Two brands of running shoes D. None of the above page 6 of 20

MGRECON - Fall 2023 ⋄ Practice Problem Set 1 8. Assume that steak and potatoes are complements. When the price of steak goes up, the demand curve for potatoes: A. shifts to the right B. does not shift; we have instead a movement along the demand curve C. shifts to the right initially and then returns to its original position D. shifts to the left page 9 of 20

MGRECON - Fall 2023 ⋄ Practice Problem Set 1 11. Along a linear, downward-sloping demand curve, the absolute value of the price elasticity A. is impossible to calculate B. increases as the price increases C. is constant and equal to the slope D. is constant and equal to the inverse of the slope page 12 of 20

MGRECON - Fall 2023 ⋄ Practice Problem Set 1 14. If a 5% increase in price leads to an 8% decrease in quantity demanded, demand is A. perfectly elastic B. unit elastic C. inelastic D. elastic page 15 of 20

MGRECON - Fall 2023 ⋄ Practice Problem Set 1 17. In a recent article, two economists estimated that the 37.5% increase in price that would result from a 75 cent tax increase on cigarettes would lead to a decrease in smoking among college students of 30%. What can you conclude about the demand for cigarettes among college students? A. It is price elastic B. It is price inelastic C. It is unit elastic D. It is perfectly elastic page 18 of 20