Quiz 1 Version A

(1)c. (2)a. (3)b. (4)a. (5)c. (6)b. (7)d. (8)a. (9)a. (10)b.

Quiz 1 Version B

(1)b. (2)b. (3)b. (4)d. (5)d. (6)a. (7)d. (8)b. (9)b. (10)a.

Test 1 Version A

(1) [Intro to antitrust: 8 pts]

1. positive.
2. normative.
3. normative.
4. positive.

(2) [Intro to antitrust: 8 pts] Antitrust policy is enforced by two U.S. federal agencies: the Antitrust Division of the Justice Department, and the Federal Trade Commission.

(3) [Demand and supply, simultaneous equations: 20 pts]

1. Q* = 600 and P* = $4.
2. Total revenue = $2400.
3. Demand curve has P-intercept at $10, Q-intercept at 1000, and slope of -1/100; supply curve has P-intercept at $1 and slope of 1/200.

(4) [Equilibrium: 16 pts]

1. excess supply.
2. $5.
3. 4 units.
4. $20.

(5) [Price elasticity of demand: 8 pts]

1. -1/2.
2. -0.1 P / (100 - 0.1 P).

(6) [Price elasticity of demand: 8 pts]

1. perfectly elastic.
2. negative infinity.

(7) [Price elasticity of demand: 8 pts]

1. -0.4.
2. inelastic.
3. increase.
4. 3 percent.

(8) [Price elasticity of demand: 10 pts]

1. increase.
2. 6 percent.
3. increase.
4. 1 percent.
5. elastic.

(9) [Price elasticity of supply: 8 pts]

1. increase.
2. 6 percent.
3. increase.
4. 18 percent.

Critical thinking [6 pts]

• Demand for DSL lines is more elastic in City A than City B. Demand for any good is more elastic when a close substitute is available. In City A, a close substitute for DSL lines is available: cable TV lines. (Full credit requires graphs showing more elastic--that is, flatter--demand in City A than in City B.)

Test 1 Version B

(1) [Intro to antitrust: 8 pts]

1. normative.
2. positive.
3. positive.
4. normative.

(2) [Intro to antitrust: 8 pts] Antitrust policy is enforced by two U.S. federal agencies: the Antitrust Division of the Justice Department, and the Federal Trade Commission.

(3) [Demand and supply, simultaneous equations: 20 pts]

1. Q* = 400 and P* = $6.
2. Total revenue = $2400.
3. Demand curve has P-intercept at $10, Q-intercept at 1000, and slope of -1/100; supply curve has P-intercept at $2 and slope of 1/100.

(4) [Equilibrium: 16 pts]

1. excess demand.
2. $6.
3. 6 units.
4. $30.

(5) [Price elasticity of demand: 8 pts]

1. -2 P / (50 - 2 P).
2. -3.

(6) [Price elasticity of demand: 8 pts]

1. perfectly inelastic.
2. zero.

(7) [Price elasticity of demand: 8 pts]

1. -1.2.
2. elastic.
3. increase.
4. 1 percent.

(8) [Price elasticity of demand: 10 pts]

1. increase.
2. 2 percent.
3. decrease.
4. 3 percent.
5. inelastic.

(9) [Price elasticity of supply: 8 pts]

1. increase.
2. 4 percent.
3. increase.
4. 16 percent.

Critical thinking [6 pts]

• Same as Version A.

[end of answer key]