ECON515 - The demand curve is given

ECON515  

Answer all questions. All questions are equally weighted. Show your work for full credit.

1. The demand curve is given by

Qd=100-2Px

a. What is the total revenue function?

b. What is the marginal revenue function?

c. At what price is revenue maximized.

d. What is the maximum revenue at the above price?

2. The demand curve is given by

QD = 500 - 5Px + 0.51 10Py -2Pz

where

QD = quantity demanded of good X

Px = price of good X

I = consumer income, in thousands

Py = price of good Y

Pz = price of good Z

a. Based on the demand curve above, is X a normal or an inferior good?

b. Based on the demand curve above, what is the relationship between good X and good Y?

c. Based on the demand curve above, what is the relationship between good X and good Z?

d. What is the equation of the demand curve if consumer incomes are $30,000, the price of good Y is $10, and the price of good Z is $20?

demand curve.

3.The supply curve is given by

Qs = - 200 + 20 Py – 5Pi + 0.5Pz

where

Qs = quantity supplied of good X

Px = price of good X

Pi = price of inputs to good X

Pz = price of good Z

a. Based on the supply curve above, what is the relationship between good X and good

b. What is the equation of the supply curve if input prices are $10 and the price of Z is $20?

c. What is the minimum price at which the firm will supply any of good X at all?

d..If the price of good X is $25, what is the quantity supplied?

4. What is a long run equilibrium in constant cost industry?