Second Sample Midterm Exam 2 Worksheet With Answers - Professor Scholz - University Of Wisconsin - Madison - 2009 Page 14
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17Second Sample Midterm Exam #2; Page 14 of 16
Extra Problems focusing on elasticties
1.
Each month Jessica buys exactly 15 Big Macs regardless of the price. Jessica's price elasticity of
demand for Big Macs is:
A) zero.
B) one.
C) greater than one.
D) less than one.
Use the following to answer questions 2-3:
Table: Market for Pizza
Price
Quantity of pizza demanded
Quantity of pizza demanded
(per pizza)
(given income of $1,000 per month)
(given income of $1,400 per month)
$20
3
7
18
4
8
16
5
9
14
6
10
12
7
11
10
8
12
8
9
13
6
10
14
2.
(Table: Market for Pizza) In the accompanying table, the income elasticity of demand for pizza
at a price of $14 per pizza when income changes from $1,000 to $1,400 per month using the
midpoint method is:
A) –1.
B) 1.
C) 1.25.
D) 1.5.
3.
(Table: Market for Pizza) In the accompanying table, the price elasticity of demand for pizza
between prices of $14 and $12 per pizza when income is $1,000 per month (using the midpoint
method) is:
A) 0.6.
B) 1.
C) 1.6.
D) 2.
4.
Suppose the cross-price elasticity between demand for Burger King burgers and the price of
McDonald's burgers is 0.8. If McDonald's increases the price of their burgers by 10%, then:
A) Burger King will sell 10% more burgers.
B) Burger King will sell 8% more burgers.
C) Burger King will sell 8% fewer burgers.
D) we cannot tell what will happen to Burger King, but McDonald's will sell 8% fewer
burgers.
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