General Business

Spring 2002

Answer Key to Homework #1

1. a. slope equal to ½; Y = (1/2)X + 5

b. slope equal to infinity; X = 0

c. slope equal to 0; Y = 0

d. slope equal to 5; Y = 5X + 5

e. slope equal to .01; Y =.01X

2. a. (90, 460)

b. (6, 44)

c. (1/9, 9 2/3)

d. (1/3, 533 1/3)

e. (1/2, 1500)

3. a. Katherine produces 12 cherry pies and 8 pairs of roller blades.

b. Yes; if Katherine could produce 16 cherry pies and 4 pairs of roller blades while Mark produced 2 cherry pies and 16 pairs of roller blades. This would result in total production of 18 cherry pies (an increase of 2 cherry pies) and 20 pairs of roller blades.

c. Mark

4. a. P = (-1/10)Q^D + 70

b. P = (1/40)Q^S + 5 or P = .025 Q^S + 5

c. Pe = $18; Qe = 520

d.

i) P = (1/40)Q^S + 10 or P = .025Q^S + 10

ii) Pe with the tax = $22

iii) Qe with the tax = 480

iv) Net price producers receive with the tax = $17

v) ($5)(480) = $2400 = total tax revenue

vi) Consumers