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Microeconomics questions - supply & demand curves and shifts

1. According to the text, the price elasticity of demand for oranges has been estimated to be-0.62. This implies that a doubling of the price of oranges would cause the quantity demanded of oranges to decrease or increase by 62 percent?

2. Assume the supply function for good X can be written as Qs = -100 + 27Px - 5Py - 1.8W, where Px = the price of X, Py = the price of good Y, and W = Wage index for workers in industry X. According to this equation:
A) Each one unit increase in price causes quantity supplied to increase by 73 units.
B) A decrease in wages would cause a decrease in the quantity supplied at each price.
C) X and Y are complements
D) X and Y are substitutes

3. Assume the demand function for good X can be written as Qd = 80 - 3Px +2py +IOI, where Px = the price of X, Py = the price of good Y, and I = Consumer income. According to this equation:
A) X and Y are complements
B) because the coefficient on Px is negative, Xis an inferior good
C) because the coefficient on income is positive, X is a giffen good
D) X and Y are substitutes

4. Use this figure, which represents the situation faced by a monopolist, to answer the following question:

For the firm in this figure, the profit-maximizing (loss-minimizing) price and level of output are:
A) P4 and Q1
B) P3 and Q1
C) P1 and Q1
D) P2 and Q2

(See attached for graph)

(See attached for rest of questions)

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Solution Summary

Seven questions related to microeconomics: supply and demand curves, and how shifts in them will affect prices and quantities.

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