I am studying for an Econ exam, and my professor posted a practice exam-with answers attached. I am having trouble with the short answer questions. Primarily, how he got to the answers. I am hoping an OTA can help show me how he derived the answers for the short answers (i.e draw some graphs). The answers are located at the back of the document.

See the attached file "demand." Each indifference curve represents a set of goods that would provide the same utility to the consumer. Each budget curve represents the different quantities of each good that can be bought with the same amount of money. In the example, we use bananas and apples. When the cost of apples falls from $6 to $4, the budget line moves outward along the apply axis. When the indifference curve is tangent to the budget line, it represent one distinct basket with set quantities of both goods that the consumer would most want given a certain income. If we graph these points, we obtain a demand curve.

Given that a rational person prefers to be on a higher indifference curve, we can prove that they cannot cross. See the attached file. The person prefers the A and B equally, since they are on the same cure. But if the curves cross, then it means he also prefers B and C equally, because they are on the same curve. This would mean that he prefers A and C equally, by the associative property. This violates our definition of indifference curves, that the higher one is preferred. See the attached file "crossing."

See the attached file "income." The graph shows the income and substitution effects of the fall in the price of good y from $4 (A) to $1 (C).The income effect dictates that real income is lower because the same nominal income buys less at the higher prices. For normal goods, then, the income effect of a price rise is negative. The substitution effect occurs when consumers substitute other goods for the one whose ...

Solution Summary

derivation a demand curve using budget constraints and indifference curves

The question asked that suppose that the Organization of Petroleum Exporting Countries raises oil prices by 50 percent in 2005. What effect will thishave on the U.S. Aggregate demandcurve? On the U.S. Short-run aggregate supply curve?

Using graph(s) compare the impact on price, quantity and total revenue when:
A) an elastic demandcurve increases along a perfectly inelastic supply curve
B) an inelastic demandcurve increases along a perfectly inelastic supply curve
NOTE: Assume the increase in demand in both cases are of the same size.
This is just

1) A product's DemandCurve is: Qd = - P + 25, and its Supply Curve is: Qs = 10 + 2P.
Algebraically determine the equilibrium price and quantity.
2. The figure below shows a firm in a perfectly competitive market:
a. Determine the Shut- down Price
b. Identify the firmÃ¢??s short run

Could you please help with these problems involving the market demandcurve.
1. The market demandcurve for a product always slopes downward to the right. Yes or no? Explain.
2. Is there a difference between a movement along a demandcurve and the shift of the demandcurve? Yes or no? Explain.
3. Why are managers intere

A company wants to prepare a demandcurve for its product that it is selling. How would it get the information to prepare the schedule? How could a company prepare a demandcurve for a new product that has not been seen by the public?

1.1
2Demand
A manufacturer faces a downward-sloping demandcurve for her product:
Q = 300 - 2P (demand)
(a)What is the equation for the inverse demandcurve? ()
(b)What is the choke price? ()
(c)What is the equation for the marginal revenue curve? ()
(d)At what price and quantity are total revenues maximize

Solve the following Problem:
C = 10 + 0.8(Yd),
Yd = Y - T,
T = 10,
I = 20, and
G = 30
Where C is the consumption, Yd is the disposable income, T is the tax, I is the investment and G is government spending.
1- Find mathematically and illustrate graphically the Aggregate Demand (AD) function.

Suppose a firm's demandcurve is given by P=120-0.5Q. Find the (value of) price elasticity of demand (point elasticity) for the demandcurve when the price is $100. Is demand elastic or inelastic?
Once it's determined to be elastic or inelastic, how do you come to that conclusion?

Quantity Price Elasticity
Demanded
100 $ 5
80 $10
60 $15
40 $20
20 $25
10 $30
1. Determine the price elasticity of demand at each quantity demanded using the formula % chg in QD divided by % chg in price.
2. Redo #1 using price changes of $

The demand and supply curves for T-shirts in LA, Ca, are given by the following equations:
Q= 24,000 - 500P Q= 6,000 + 1,000P
where P is measured in $ and Q is the number of T-shirts sold per year.
a. Find the equilibrium price and quantity algebraically.
b. If the tourists decide they do not really like T-shirts