Blog

You have taken ECON 1101 Principles of Microeconomics and now you are a marketing intern for a small local theater.  The manager of a theater company is deciding to lower the charge for the play that was a hit. During their last season performance, the theater charged $10 per ticket and they sold 300 tickets. You find out that a similar theater (a competitor) charged $15 per ticket and they sold 200 tickets. Having taken ECON 1101, you would suggest to calculate the ___________. Using the midpoint formula, you found the elasticity (in absolute value) in this locality is _________ and the so demand is _________. You recommend to __________ the price of the tickets.

Questions 23 – 26 refer to the graph below and the following scenario: the government has a buyout program according to which it purchases all the excess supply needed to prevent the price from falling below $9.

Which buyers will buy at the equilibrium price?

University of Minnesota students love grabbing a Cookies on their way to ECON 1101 and the number of students attending ECON 1101 at the UMN has increased this year.

Consider again the situation in which the government imposes a $4 tax per Grub Hub delivery. What can we say about how consumers and producers share the burden of the tax?

Suppose, instead, that the government imposes a $4 tax per Grub Hub delivery. What is the producer surplus in this scenario?

Questions 37 and 38 are based on the diagram above.

Consider the market for Uber rides in New York City. Suppose consumers’ income decreases and that, as a result, the equilibrium price decreases and the equilibrium quantity remains unchanged. Which of the following is a possible explanation for why this happened?

Two things happen: (1) Price of doughnuts, a substitute, has gone down and (2) an improvement in technology has enabled suppliers to produce twice as many Cookies.

When the government imposes the tax of $10 per Grub Hub delivery, what can one say about how consumers and producers share the burden of the tax? (i) Consumers bear a larger burden of the tax. (ii) Producers bear a larger burden of the tax. (iii) The government can decide which side (consumers or producers) bears a larger burden. (iv) There is no transaction in the market so we can’t speak about the tax burden.