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• Week 7: 26 October, 2022/
• Mid-term Exam Fall 2022

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Calculate the price elasticity of demand for tomatoes using the midpoint formula if an increase in the price of mangoes $2.00 to $2.80 causes the quantity of tomatoes demanded to fall from 200,000 to 100,000.

E_d= (100,000-200,000)/[(100,000+200,000)/2]

(2.80-2) /[ (2.80+2)/2]

E_d= -100,000/(300,000/2 =-100,000/150,000

0.80/(4.80/2) 0.80/2.40

E_d= -0.66

0.33

E_d= -2 elastic

Question2

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The weekly quantity of paper supplied for paper is 10 when price is $5,000. When the price of paper increases to $7,000, the quantity supplied increases to 40. Calculate the elasticity of supply using the midpoint formula.

E_s= (40-10)/[(40+10)/2]

(7,000-5,000) / [ (7,000+5000)/2]

E_s= 30/ ( 50/2) =30/25

2,000/12,000/2 2,000/6000

E_s= 1.2

0.33

E_s= 3.63 elastic

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Thecircular flow modelbelow is incomplete. Assign the numbers to the statements.

a. Shein Inc. sold designer shirts at a department store. 3

b. Apple hired five new software developers. 8

c. Caron spent $52 for a meal at Cutie's Restaurant. 2

d. Claremont Farms rents its pineapple farm for $50,000 per year. 6

e. Eric received his senior portrait photographs from Glamour Shots. 1

f. Fun Theme Park received $158,000 in ticket sales last month. 2

g. Peter, a recent graduate with a PhD in economics, applies for jobs with the5

h. Joanne earns $22 per hour from her summer internship program. 6

Question4

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Andy and Brenda can cultivate the following quantities of potatotes and cabbagee during a week. Andy can grow 100lbs of potato or 200 heads of cabbage. Brenda can grow 120lbs of potato or 150 heads of cabbage.

a. What is Andy's opportunity cost of growing potatoes?

b. What is Brenda's opportunity cost of growing potatoes?

c. What is Andy's opportunity cost of growing cabbage?

d. What is Brenda's opportunity cost of growing cabbage?

e. Who has the absolute advantage in growing potatoes?

f. Who has the absolute advantage in growing cabbage?

g. Who has the comparative advantage in growing potatoes?

h. Who has the comparative advantage in growing cabbag