Question 1.

A new bakery has just opened, and in an attempt to attract awareness, it is offering free unlimited samples of its chocolate chip cookies. Assuming you can only consume the cookies in-store (you cannot take them home), how many pieces of cookie would you have?

Question 2.

You have just spent two hours studying microeconomics and this has made you very hungry. You have $10 to spend on a snack and decide to go to Taco Bell. Putting your newly acquired economics knowledge to use, you have developed the following table to assist with your purchase decision:

Double Decker Tacos (P = $1)	Chicken Burrito Supremes (P = $2)
Q	TU	MU	MU/P	Q	TU	MU	MU/P
0	0			0	0
1	20	20		1	28	28
2	34	14		2	46
3	44	10		3	54
4	48	4		4	56
5	48	0		5	56
6	42	-6		6	52

(a) Fill in the missing values in the table above. (b) If you bought 6 tacos and 2 burritos are you maximizing your utility? Explain.

Question 3

Assume the labour market is in equilibrium and the equilibrium wage is $10. Now suppose, the government imposes a price floor at $15 that is above the original equilibrium price. Explain ALL economic effects of the price floor?(Be sure to discuss quantity demanded and quantity supplied of labour, prices, impacts on producers, etc. Include a diagram as part of your answer)

Question 4

Assume the rental market is in equilibrium and rental price of a 1-bedroom unit is $1,000 a month. Now suppose, the government imposes a price ceiling of $500 that is below the original equilibrium price. Explain ALL economic effects of the price ceiling? How do you anticipate the effectiveness of this policy to increase the quantity of affordable housing?(Be sure to discuss quantity demanded and quantity supplied, you can draw a diagram as part of your answer)

Question 5

Below is some information on the demand for cars, trucks and vans. Refer to the information below to answer this question. Please show all your work.

Income	Quantity of Cars Demanded	Quantity of Bicycles Demanded	Quantity of Vans Demanded
$50 000	200	40	80
$60 000	260	30	85

1. What is the income elasticity of Cars?What type of good must cars be?
2. What is the income elasticity of bicycles and what type of good must bicycles be?

Question 6

Using discussion and a diagram. Discuss how the market for lumber will self-adjust if the current market situation was a surplus.

Question 7

If your willingness to pay (WTP) for a Netflix subscription was $20 per month and Netflix announced it was increasing prices from $12 to 16$. Discuss how this price change affects consumer surplus. (please draw a diagram as part of your solution and label the area that is consumer surplus)

Question 8

The last two years have seen a decrease in the ability of consumers to travel and spend on other similar services. As consumers shift their preferences from buying physical goods and back to buying services (travel, restaurants, etc). "Canadians are expected to increase spending on travel as foreign economies open and are less restrictive, this will boost demand for travel faster than airlines can supply flights"

Market: travel. Analyze this quote using a supply and demand diagram. Also discuss in words, what will happen to the demand for physical goods?

Question 9

Suppose a newly released study shows that battery-powered toys harm a child's development and recommends that parents adjust their purchasing behaviour accordingly. Use diagrams to show the effect of price and quantity in each of the following markets

1. The market for battery-powered toys
2. The market for AAA batteries
3. The market for yo-yos (which do not require batteries)

Question 10

Using diagrams show the changes in equilibrium price and quantity exchanged would be expected in the following markets in the situations described:

1. Crude oil market:As petroleum reserves decrease, it becomes more difficult to find and recover crude oil
2. Air travel:Worries about air travel safety cause travelers to shy away from air travel
3. Rail travel:Worries about air travel safety cause travelers to shy away from air travel (not a typo)
4. Hotel rooms in Toronto:Worries about air travel safety cause travelers to shy away from air travel (not a typo)
5. Ocean freight:Canadians buy more physical goods.