Suppose the utility function of a representative consumer in Europe is !(#, %) = 6)*+# + )*+%, where # isnon-GM food and % is GM. The marginal utilities are: -!. = 6/# and -!0 = 1/%. The prices are 2. =2 and 20 = 1 and the representative income 4 = 14.

A TV channel has estimated the demand for its service to be givenby the following function: Q=9.83p-1.2A2.5Y1.6P0-1.4whereQ = monthly sales in unitsP = price of the service in $A = promotional expenditure in $’000Y = average income of the market in $’000P0 = price of ‘home movies’ in $ The current price of the TV channel is $60, promotional expenditure is$120,000, average income is $28,000, and the price of ‘homemovies’ is$45.Indicate whether the following statements are true or false, givingyour reasons and making the necessary corrections h. Current sales are over a million units a month. i. The demand curve for the channel is given by:Q=9.83p-1.2j. The channel’s sales are more affected by the price of ‘home movies’ than by the price of its own service.k. If the channel increases its price this will reduce its profit.

The demand function for electric fans is as follows: • Qx = 100 – 0.5Px + 0.03I + 3Py where: • Qx = quantity demanded of electric fans • Px = average price of an electric fan • I = average income • Py = average price of an air conditioner Assume that the average price of an electric fan is $50, an air conditioner costs $400 and average income is $4,000. Determine or calculate the following: 1. The slope of the demand curve, 2. If air-conditioners are complimentary or substitutionary to electric fans with respect to the coefficient and, 3. If electric fans are a normal or inferior good with respect to the income coefficient.

The demand equation for school lunches is x=100-10pwhere x is the number of lunches purchases and p is the price in dollars. Which of the following represents E(p)? A) p/10-p b) -p/10-p c) p/20-p d) -p/100-10p e) p2/100-10p