1)What is the marginal net benefit of producing the fourth unit?

No. units produced Total Revenue Total Costs

0 0 0

1 100 50

2 180 110

3 250 180

4 290 270

5 310 380

2) Suppose total benefits and total costs are given by B(Y) = 600Y 12Y²and C(Y) = 20Y². What level of Y will yield the maximum net benefits? Hint: marginal benefit = 600 - 24Y and marginal cost = 40Y.

3) Suppose market demand and supply are given by Q^d= 100 - 2P and Q^S= 5 + 3P. The equilibrium quantity is:

4)Suppose the demand for good X is given by Q^d_x= 10 - 2P_x+ P_y+ M. The price of good X is $1, the price of good Y is $10, and income is $100. Given these prices and income, how much of good X will be purchased?

5) Suppose the own price elasticity of demand for good X is 0.25, and the quantity of good X increases by 5 percent. What would you expect to happen to the total expenditures on good X?

6) Suppose that a consumer's preferences are well behaved in that properties 4-1 to 4-4 are satisfied and the initial equilibrium consumption bundle consists of 100 units of X and 50 units of Y. If P_Xdecreases such that the new equilibrium consumption bundle is 150 units of X and 75 units of Y, then goods X and Y are: substitutes, complements, unrelated, or inferior? Explain your reasoning.

7) Mitchell's money income is $150, the price of X is $2, and the price of Y is $2. Given these prices and income, Mitchell buys 50 units of X and 25 units of Y. Call this combination of X and Y bundle J. At bundle J, Mitchell's MRS is 2. At bundle J, if Mitchell increases consumption of Y by 1 unit, how many units of X must he give up in order to satisfy his budget constraint?

8) If the annual interest rate is 0 percent, the present value of receiving $1.10 in the next year is:

9) What is the maximum amount of good X that can be purchased if X and Y are the only two goods available for purchase and P_x= $10, P_y= $20, Y = 5, and M = 400?

10) Suppose market demand and supply are given by Q^d= 100 - 2P and Q^S= 5 + 3P. If a price ceiling of $17 is imposed, what will be the resulting full economic price?