Economics Test Review- I have questions!?
1. Calculate consumer surplus in the market assuming equilibrium in teh market exists and that demand is linear.
we are given data that looks like this:
Price Quanitity demanded Quantity supplied
5 30 0
10 24 9
15 18 18
20 12 24
25 6 30
30 0 35
I had something written down about (change in quantity demanded/average quantity demanded) times (change in price/average price) but I am no longer sure what this is or how it would relate to the data if this even is what I should be using.
2. Abby sells toys. Currently she sells her toys at a price of $12 per toy, and she sells 500 toys. Abby is considering lowering the price to $8 per toy and expects to sell 1,100 toys per day. Given her expectations, Abby believes the price elasticity of demand for her toys is equal to _____.
The answer was 15/8 but once again I am not sure how I go about finding this. I feel like there is a formula I am not aware of on this one. Please let me know if you know it.
3. Based on the graph, if the price of pizza rises from $5 to $10 we would expect Pete's revenue to ___ because demand is ___ in that price range. The answer was rise; inelastic. Both of these points are lower than the equilibrium price on the graph if that helps at all. Here I am not sure how you would know that his revenue would rise because I was thinking that since the price went up less would be demanded and his revenue would fall.
4. You observe that the price of potato chips changes from 1.25 per bag to $1.49. After the change, orange soda quantity demanded changed from 87 to 66. What i the cross price elasticity between potato chips and orange soda?
Here I once again feel as though I am missing a formula that I would need to know. Is anyone aware of this or know how to complete this one?
5. Lastly, With a price ceiling of $150 in the market for oil, what is the marginal benefit of the last barrel of oil supplied? The answer is 262.50 but I am not sure how you would get this. They give you Quantity demanded= 2300 - 8(price) and quantity supplied = 4(price) -400. I thought you would plug in 150 for price in the quantity demanded formula but this does not appear to give me the right answer. Anyone know what I should be doing?
Thank you so much for looking at my questions, I know it was long but I really appreciate it! Have a nice day!