Practice Quiz 1
1) Fred and Frank are vacationing dog owners. Each owns two dogs which he
would like to leave behind at the Pampered Pets Resort while he travels. The
graphs below depict their individual demand curves for dog babysitting services.
Which of the following graphs depicts the total demand for Pampered Pets Resort’s
services by Fred and Frank?
,Graph 1
At a price of $20, all four dogs would be boarded at the Pampered Pets Resort. This
graph indicates that only three would.
Graph 2
This graph is the vertical sum of the two demand curves. To obtain an accurate
combined demand curve, the two individual curves should be summed horizontally.
Graph 3
This graph indicates that there would be demand for 4.5 dogs to be babysat at a price of
$10. 1/2 of a dog would be an odd quantity to babysit.
, Graph 4
correct
To obtain the total demand from the two customers, simply sum the two demand curves
horizontally.
2) A clothing store has a discount for customers who purchase multiple shirts: after
paying full price for one shirt, the second shirt is 50% off. Bob goes to the store
and finds a type of shirt he likes that is sold for $30 per shirt, so he purchases two
shirts for a total cost of $45. Which of the following MUST be true?
Bob’s willingness to pay for the first shirt is no more than $45.
None of the information available puts an upper limit on Bob’s willingness to pay for the
first or second shirts.
Bob’s willingness to pay for the second shirt is at least $22.50.
Bob may have had a high WTP for the first shirt and a low WTP for the second shirt.
Bob’s willingness to pay for two shirts is at least $45.
correct
Since Bob purchased the shirts for $45, he must have been willing to pay that much for
them.
Bob’s willingness to pay for the second shirt is lower than his willingness to pay for the
first shirt.
This is likely but not necessary: Bob’s WTP for the second shirt could also be equal to
his WTP for the first.
1) Fred and Frank are vacationing dog owners. Each owns two dogs which he
would like to leave behind at the Pampered Pets Resort while he travels. The
graphs below depict their individual demand curves for dog babysitting services.
Which of the following graphs depicts the total demand for Pampered Pets Resort’s
services by Fred and Frank?
,Graph 1
At a price of $20, all four dogs would be boarded at the Pampered Pets Resort. This
graph indicates that only three would.
Graph 2
This graph is the vertical sum of the two demand curves. To obtain an accurate
combined demand curve, the two individual curves should be summed horizontally.
Graph 3
This graph indicates that there would be demand for 4.5 dogs to be babysat at a price of
$10. 1/2 of a dog would be an odd quantity to babysit.
, Graph 4
correct
To obtain the total demand from the two customers, simply sum the two demand curves
horizontally.
2) A clothing store has a discount for customers who purchase multiple shirts: after
paying full price for one shirt, the second shirt is 50% off. Bob goes to the store
and finds a type of shirt he likes that is sold for $30 per shirt, so he purchases two
shirts for a total cost of $45. Which of the following MUST be true?
Bob’s willingness to pay for the first shirt is no more than $45.
None of the information available puts an upper limit on Bob’s willingness to pay for the
first or second shirts.
Bob’s willingness to pay for the second shirt is at least $22.50.
Bob may have had a high WTP for the first shirt and a low WTP for the second shirt.
Bob’s willingness to pay for two shirts is at least $45.
correct
Since Bob purchased the shirts for $45, he must have been willing to pay that much for
them.
Bob’s willingness to pay for the second shirt is lower than his willingness to pay for the
first shirt.
This is likely but not necessary: Bob’s WTP for the second shirt could also be equal to
his WTP for the first.
