inclass_2 - A new breakfast place opens up in town but...

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

View Full Document Right Arrow Icon
A new breakfast place opens up in town, but, unfortunately for you, it’s run by a bunch of economists,  who use as a laboratory as much as they use it to make profits.  So this breakfast place is not one of  those all-you-can eat places, instead it charges prices a la carte – for each item.  From the behavior of  people as these prices change, these economists have gotten a lot of elasticity data.  The following  questions are based on that data. 1. The owners first observation is that as the price of bacon goes up, the amount of  sausage bought also increases.  The cross price elasticity of sausage with respect to  bacon is therefore  a. Greater than 0 b. Less than 0 Draw the effect on the market for sausage of this increase in the price of bacon. Draw an increase in demand (please forgive the lack of labels above) 2. An increase in the price of eggs lowers the amount of cheese that people are ordering. 
Background image of page 1

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

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 10/06/2008 for the course ECON 211 taught by Professor Johnson during the Fall '07 term at Clemson.

Page1 / 6

inclass_2 - A new breakfast place opens up in town but...

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