PRACTICE QUESTIONS SHORT ANSWERS TYPE (OCT 03) 1. The cross-price elasticity of demand between golf balls and golf clubs is positive or negative. Explain your answer. I Rent control shortages of apartments which are larger in the long run than in the short run. True or False. Explain your answer using diagram. Last year Nicole bought 4 pairs of shoes when her income was $60,000. This year her income is $?0,000, and she purchased 6 pairs of shoes. Find out Nicole's income elasticity using the midpoint method. Is it elastic or non-elastic, and what is the sign of elasticity? If demand is elastic, how will an increase in price change total revenue? Explain. What is the relationship between elasticity of demand or supply with the tax incidence or tax burden? Draw and explain a production possibility frontier for an economy that produces milk and cookies. What happens to this frontier if a disease kills half of the economy's cows? Beer and pizza are complements because they are often enjoyed together. When the price of beer rises, what happens to the supply, demand, quantity supplied, quantity demanded, and price in the market for pizza. Use a diagram to explain your answer. Below are some data from the land of milk and honey. Year Price of Milk Quantity of Milk Price of Honey Quantity of Honey 2020 $1 100 quarts $2 50 quarts 2021 1 200 2 100 2022 2 200 4 100 a. Compute nominal GDP, real GDP and the GDP Deflator for each year, using 2020 as base year. 11. Compute the percentage change in nominal GDP, real GDP, and the GDP deator in 2021 and 2022 from the preceding year. For each year, identify the variable that does not change. Explain why your answer makes sense. c. Did economic well-bein g increase more in 2020 or 2021? Explain. 9. Use the following supply and demand schedules for bicycles to answer the questions below. Price Quantity Demanded Quantity Supplied $3 00 60 30 400 55 40 500 5 0 50 (100 45 60 700 40 70 800 3 5 80 a. Ln response to lobbying by the Bicycle Riders Association, Congress places a price ceiling of $200 on bicycles. What effect will this have on the market for bicycles? Why? h. Ln response to lobbying by the Bicycle Riders Association, Congress places a price ceiling of $400 on bicycles. What is the result of a price ceiling of $400 on bicycles