problem set 2 - answer

problem set 2 - answer - ECON 101-Fall 2007 PROBLEM SET...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: ECON 101 -Fall 2007 PROBLEM SET 2-ANSWER KEY Professor Serrano-Padial Due on Tuesday 25th at 9pm in your TA mailbox. Please remember to write down your name, the name of your TA and your discussion section. Staple pages together. 1 The demand curve The demand for bacon in the great island of Lala is given by q b = 120- 2 p b + 60 c- 5 p t , where q D is the quantity of bacon (in pounds) demanded, p b is the price of a pound of bacon, c is equal to 0 if the weather is warm and equal to 1 if the weather is cold; and p t is the price of tortillas. Assume for the moment that the weather is warm ( c = 0) and that the price of tortillas is p t = 4. 1. Graph the demand curve for bacon. What is the demand when the price of bacon is $20? How much does the demand change when the price drops from $20 to $10? Is this a shift or a movement along the demand curve? Answer: The demand curve is p b = 50- . 5 q b . See graph below. When p b = 20 the demand is q b = 60. The quantity demanded increases 20 pounds....
View Full Document

This note was uploaded on 04/14/2009 for the course ECON 101 taught by Professor Hansen during the Fall '07 term at University of Wisconsin.

Page1 / 4

problem set 2 - answer - ECON 101-Fall 2007 PROBLEM SET...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online