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EC 315 Review Problems 2
David C. Wong
April 3, 2009
Midterm 2 covers the following material: Chapter 3 up to p. 95 and Chapter 4.
1.
Do problem 2 on p.110 of the textbook.
2.
Do problem 3 on p. 110 of the textbook.
3.
Do problem 4 on p. 111 of the textbook.
4.
Management at El Grande Tacos has completed a study of weekly demand for its “oldfashion”
tacos in 53 regional markets.
The study revealed that
Pop
A
P
P
Q
o
55
8
.
0
800
1200
400
+
+
+

=
,
where
Q
is the number of tacos sold per store per week,
A
is the level of local advertising expenditure
(in dollars),
Pop
denotes the size of the local population (in thousands), and
o
P
is the average taco
price of local competitors.
For the typical El Grande’s outlet,
50
.
1
$
=
P
,
00
.
1
$
=
o
P
,
000
,
1
$
=
A
, and
40
=
Pop
.
(a) Calculate the weekly sales of tacos for the typical El Grande’s outlet.
(b) What is the current ownprice elasticity of demand for El Grande’s tacos?
(c) What is the crossprice elasticity of demand for El Grande’s tacos?
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This note was uploaded on 04/15/2009 for the course ECON ECON 315 taught by Professor Wong during the Spring '09 term at CSU Fullerton.
 Spring '09
 Wong
 Economics

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