Using data for 48 million interactions over the first 24 weeks of last year from Uber’s four biggest U.S. markets – New York, San Francisco, Chicago, and Los Angeles – Steven Levitt (author of “Freakonomics”), researchers at the University of Chicago and Oxford, and Uber mapped out the Uber demand curve. They found that doubling fares reduces demand by around 40%. That’s why surge factors can be so large – reportedly up to 10 times on New Year’s Eve. It takes big price changes to prevent shortages. (WSJ, 9/19/16) Which of the following statements is true?

Write the marginal revenue function associated with this demand function when Y=32.42.

Consider the indifference map and budget constraints below. Assume the price of good Y is $5. Two points on the demand curve for good X are

Using your solution in Question 11, estimate how much Mackenzie Enterprises’s profit changes if the production constraint increases to 105 units. Include a description of this change (size and direction) in words. Solutions that re-solve the Lagrangian Function will not be considered.

If a firm produces at an output level where marginal profit is positive, it

Alexis is a frequent shopper at Starbucks and spends all of her allocated budget each time she goes. For the last Grande Java Chip Frappuccino she ordered and consumed, she received 25 additional units of utility. For the last Grande Vanilla Latte she ordered and consumed, she received 20 additional units of utility. If the price of the Grande Java Chip Frappuccino is $4.45 and the price of the Grande Vanilla Latte is $4.15, she should

Use the prompt below to answer questions 11 – 13. Assume that Mackenzie Enterprises sells two products, X and Y. Its monthly profit from selling both X and Y is given by:

Suppose the graph below represents indifference curves for consumption bundles containing quantities of goods A and B:   Which of the following is correct regarding marginal utility of good B when holding the quantity of good A in the consumption bundle constant and increasing the quantity of good B by one unit?

PART I (10 multiple choice questions, 30 points total)

Calculate income elasticity at market equilibrium and when Y=32.42.