Assignment 4 Name: 40 points max 7 analytical questions: 28 points altogether . . . 4 multiple choice: 3 points each On analytical questions, points may be deducted if you get the correct answer but make no effort to explain how you got it, of if your general process was correct but you got the wrong final answer. 1. (4 points)_(chapter 5: effect of price change) Depict a linear market demand curve for food (think about what should be on the horizontal and vertical axis for this to be a demand curve). Let price be fixed at a given level (horizontal line). Graphically show the change in consumer surplus (shade it in) if there is a price rise for that good (a new horizontal line above the previous one). 2. (4 points) Once again, draw a linear market demand curve for food. Let price be fixed at a given level (a horizontal line). Graphically show how a new demand curve reflecting higher average income for consumers, and then show the change in consumer surplus (shade it in). 3. (4 points)_(chapter 5: consumer surplus) The price of Steak Burritos in Chipotle is $5.50. I would be willing to pay $10 dollars for the first Steak Burrito, $8 for the second, $6 for the third, $4 for the fourth, and nothing for the fifth or any additional burritos. How many burritos would I buy? 4. (4 points) Continuing from problem 3, compute my total consumer surplus, and illustrate using a graph. 5. (4 points)_Continuing from above, if the price of steak burritos fall to $3, how many burritos would I buy and what is the change in my total consumer surplus compared to the situation in 7? Illustrate using agraph6. (4 points) (chapter 6) If the Cobb-Douglas production function is g = L0'75K0'25, what is the average product of labor ( APL), holding capital xed (that is, just leaving K alone in the equation)? 7. (4 points) (chapter 6) If the Cobb-Douglas production function is g = 1.0351(0'25, what is the marginal product of labor (All: )1? Multiple choice: In the remaining questions, indicate which letter has the best answer. (3 points each) 8. You enter a store and buy a bottle of soda. Do you usually receive consumer surplus? A) Yes, because you wouldn't buy the soda if your willingness to pay would be less than the price. B) Yes, because you are thirsty. C) No, because you value other drinks more. D) No, because you have less money after the transaction. 9. Suppose consumers of cigarettes can be classied into two groups: heavy users and light users. Heavy users purchase more cigarettes and are less sensitive to price changes relative to light users. To determine whether a heavy user suffers a greater loss of consumer surplus than a light user does when the price of cigarettes increases, one would need to lcnow A) each group's average income. B) the actual quantities purchased by each. C) each indiuiglyal's price elasticity of demand. D) no additional information. 10. Which of the following statements best describes a production function? A) the maximum prot generated from given levels of inputs B) the maximum level of output generated from given levels of inputs C) all levels of output that can be generated from given levels of inputs D) all levels of inputs that could produce a given level of output