1-803-07A Lecture Notes - Lecture 9: Price Ceiling, Historical Cost, Prussian P 8
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2015: this exam has 5 questions, and is worth a total of 100 points, you have two (2) hours to answer the following questions, write your answers directly on this questionnaire, and clearly justify all your answers. Unless otherwise specified, no credit will be awarded for unjustified answers. Question 1 multiple choice questons (16 points) Suppose that the government sets a price ceiling below the competitive market price. The demand curves of two groups of consumers are given by: P = 120 - qb where qa and qb are the quantities in group a and b respectively. Suppose that the price is the same for both groups with p = . Which statement is false: group a consumes more units than group b, in group b, demand is unit elastic, demand is more elastic in group a, aggregate demand is given by: p = 110 3q / 4. Consider identical firms in a perfectly competitive environment.
