1. Tom is talking to Emily: "Yesterday I went to a movie and the price was $13. Do you know

I have to work 1.5 hours to pay for that movie, and I could have bought a t-shirt with that

money." Identify the nominal price, the relative price, and the real income in this statement.

2. If the price of American dollars falls relative to the Canadian dollar do more Americans or

Canadians cross the border to shop?

3. Suppose an individual's demand for potato chips is given by the equation: Q = 355P. What

is the quantity demanded when the price is $10, $7, $6, and $3?

4. From question (3), if the price was $3, what would be the total amount spent on potato chips?

What would be the consumer's surplus? What would be the total value?

5. Is it inconsistent for a parent to yell at their child to "stop bugging them" one minute, but

then get upset if the child goes missing the next?

6. What economic idea was King Solomon getting at when he said:

Let your foot rarely be in your neighbor's house, lest he become weary of you

and hate you.

Proverbs 25:17

7. Fred has an income of $10,000 per month. There are two goods to consume with prices p1 = 50

and p2 = 100. What is Fred's real income in terms of good 1. What is his real income in terms

of good 2? What is the relative price of good 2 to good 1?

8. Below are some lyrics to the classic Barry White tune "Can't Get Enough of Your Love, Babe"

Are these lyrics consistent or inconsistent with our principle of diminishing marginal value?

I've heard people say that

Too much of anything is not good for you, baby

But I don't know about that

Darling, I can't get enough of your love babe ...

9. Consider a consumer with an ordinary demand for some product. Will it always be true that

the consumer's surplus is greater than the total expenditure on the good if the demand curve

is inelastic.'