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Midterm I--Answer Key for Practice Exam #2

Multiple choice answers

  1.c   6.a 11.e 16.c 21.b
  2.e   7.d 12.e 17.e 22.a
  3.d   8.b 13.c 18.c 23.a
  4.b   9.d 14.d 19.e 24.a
  5.c 10.a 15.b 20.b 25.e

Problem section

Midtm1-S92-Fig.gif (7610 bytes)

At bundle K, wine = 3; cheese = 3
Own price elasticity of demand for wine = -3/7
Demand for wine is inelastic.
Cross elasticity of demand for cheese with respect to the price of wine = -3/7.
The goods are complements.