Assuming a Linear Demand Function Qx = 80 - 20Px

Identify the Px and Qx tha will maximize the Total Revenue from this Demand Function.

	Qx = 80 and Px = $20
	Qx = 40 and Px = $4
	Qx = 40 and Px = $2
	Qx = 80 and Px = $4

The following are correct statements connected to Tax and Subsidy Incidences, EXCEPT:

	The most Inelastic Sector has the Highest Tax Incidence
	The most Inelastic Sector has the Highest Subsidy Incidence
	The DWL from a Tax is Large if Demand is higly Elastic
	The DWL from a Tax is Large if the Supply is highly Inelastic

The following are correct descriptions about the Budget Constraint (BC), as described in class, EXCEPT:

	The BC graphically describes all the maximum combinations of X and Y that could be attained for any given set of (I, Px, Py)
	In the model presented in lecture, the BC follows the condition: I = Px Qx + PyQy
	If both Px and Py increase in the same propotion, the BC stays the same.
	The slope of the BC is the ration of prices (Px/Py)

The following is the KEY reasons why Indifference Curves are typically CONVEX to the origin:

	Because X and Y are goods.
	Because X and Y are ususally close substitutes.
	Because the assumption of decreasing marginal benefit in consumption.
	Because the consumer is always indifferent between consuming one unit of X or one unit of Y.