econ

2017.06.13

1

CHINA UNIVERSITY SUMMER SCHOOL ASSOCIATION

WUHAN UNIVERSITY

Intermediate Microeconomics (Econ 021) – Midterm Exams1

STUDENT NAME: …………………………………………………………………………

QUESTION 1: If the demand and supply curve for iPhone 7 are:

D = 100 - 6P, S = 28 + 3P

Where D = Demand; S = Supply and P is the price of an iPhone, what is the quantity of iPhones

bought and sold at equilibrium? (5 Marks)

QUESTION 2: Given the following data:

Play Station 4 (PS4) P = 80 - Q (Demand); P = 20 + 2Q (Supply)

Given the above demand and supply equations for PS4, find the equilibrium price and quantity

(5 Marks)

QUESTION 3:

The weekly demand function for butter in the province of Hubei is Qd = 20000 - 500Px + 25M +

250Py, where Qd is quantity in kilograms purchased per week, P is price per kg in dollars, M is

the average annual income of Hubei Province consumer in thousands of RMB, and Py is the

price of a kg of margarine. Assume that M = 20, Py = $2, and the weekly supply function is such

that the equilibrium price of one kilogram of butter is $14.

Calculate the price elasticity of demand for butter at the equilibrium. What can we say about the

demand for butter at this price-point? What significance does this fact hold for suppliers of

butter? (10 Marks)