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'l. 2. All til at d: 3. 4. 5. El. Ti". Students should not Indulge In conversation, or in any mean a communication with other students The accompanying table shows the price and yearly quantity sold of T-shirts in the town of crystal Lake. Price of T Shirt _ _ _ _ Using the midpoint method, calculate the price elasticity of demand when the price of a T-shirt rises from $5 to $6 [2 marks} Do you think the price elasticity of demand for Ford sport-utility vehicles (Gulls) will increase, decrease, or remain the same when each of the following events occurs? Explain your answer. {4 marks} Either car manufacturers, such as General Motors. decide to make and sell SlJ'v's. SlJ'v's produced in foreign countries are banned from the American market. Due to ad campaigns, Americans believe that SlJ'v's are much safer than ordinary passenger cars. The time period over which you measure the elasticity lengthens. During that W longer time, new models such as four-wheeldrlve cargo vans appear. Assume a situation where producer surplus is decreased with a greater margin than consumer surplus as a result of a tax Imposed by government. 1i'Il'ith the help of a graph explain [il- marks} a} Which side of the market is more elastic than the other b} Which side of the market is likely to share the larger pol1lon of the tax Teacher Helper is a small company that has a subcontract to produce instructional materials for disabled children In public school districts. The owner rents several small rooms in an office building in the suburbs for $600 a month and has leased com . uter - ul .ment that costs $480 a month. Show com - utatlona 5 marks} \"m\" Cost 45 'II Li"! '-.I =- E D Q Your firm is currently producing and selling 1m brushes for $2 each. It has average fixed costs Si]. 5 and average variable costs $11.15 at this production level. Ealculate the rm's total revenue. total xed oost, total variable cost, and total profit at this production level. ('2 marks) What are the two conditions under which total utility is maximized? [1 mark] If total utility from good it were to reach a maximum and then start to decline for additional units of good It, what would this imply about the marginal utility from additional units of good it? Make up a numerical example to show this. {2 marks} a} derive the marginal utility schedule. {2 marks} b} plot the total and the marginal utility schedules. [2 marks} c} detem'rlne where the law of diminishing marginal utility begins to operate. [2 marks) A survey indicated that chocolate is Americans\" favourite Ice cream avour. For each of the following. indicate the possible effects on demand. supply, or both as well as equilibrium price and quantity of chocolate Ice cream. {use graphs to explain your answers) {Er marks} a} A severe drought in the Midwest causes dairy farmers to reduce the number of milkproduclhg cattle in their herds by a third. These dairyI farmers supply cream that Is used to manufacture chocolate Ice cream. b} A new report by the American Medical Association reveals that chocolate does. in fact. have significant health benefits. c} The discovery of cheaper synthetic vanilla flavouring lowers the price of vanilla ice cream. d} New technology for mixing and freezing Ice cream lowers manufacturers costs of producing chocolate Ice cream Page 1 of 'I {A}