consider the following demand schedule

price quantity demanded

$11 18

9 26

7 36

5 48

What is the price elasticity of demand between:

a Price = $11 and Price = 9

b Price = $7 and Price = $5

2. Determine the price elasticity of Hamburgers if the decline in price of Hamburgers increases the total revenue of the seller. (3)

3. Two commodities are likely to be substitutes or compliments If the cross elasticity of these two goods is positive? (3)

4. Determine the price elasticity of birthday cards when Lisa, the store manager of the Gift Card Store found no change in her total revenue by decreasing the price of birthday cards. (4)

5. Calculate marginal utility of commodities A and B in the following table. What combination of A and B would maximize the utility if A costs $1 a unit, B costs $2 a unit and $ 6 need to be spent. (8)

units TU of A TU of B MU of A MU of B

1 7 14 - -

2 13 26 - -

3 18 36 - -

4 22 44 - -

6. What is likely to happen to the slope of the budget line of movie tickets when:

a. your income increases from $100 to $150 (4)

b. Price of the movie tickets changes from $20 to $20 a ticket

7. Compute the missing values in the following table: (5)

Q TFC. TVC. TC AFC AVC ATC MC

1. $60. $110 - - - - -

2 - 200 - - - - -

3 - - 360. - - - -

4 - - - - - $120. -

5 - - - - - - $155

8. Construct the marginal product schedule from the following production function. (4)

LAbor Total product

1 3

2 8

3 15

4 21

5 25

6 26

7 24