1-803-07A Lecture Notes - Lecture 18: Average Variable Cost, Perfect Competition, Variable Cost

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3 Jul 2018
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This exam has three (3) parts 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. Part 1 multiple choice questions (16 points) Consider a firm with the following cost function: c(q) = 400 +10q. The demand curves of two groups of consumers are given by : Qa = 100 - 2p and qb = 120 - p where qa and qb represent the quantities demanded by consumers. Suppose that the price is p = 40. What statement is true: quantity consumed is higher in group a, demand is more elastic in group a, quantity consumed by group b is 60 units, demand elasticity is equal to -1 in group b. For questions 2. 1 to 2. 3, consider the following demand function for good x:

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