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Unformatted text preview: PROBLEM ROBLEM ROBLEM ROBLEM SET ET ET ET 2 Due: Monday, February 2 nd Please write as neatly as possible and circle all of your final answers. Chapter 2 Questions : 1. Use supply and demand curve analysis to illustrate the impact of the following events on the market for coffee. a. The price of tea goes up by 100 percent. b. A study is released that links consumption of caffeine to a higher incidence of cancer. c. A frost kills half the Columbian coffee bean crop. 2. The demand and supply curves for a particular product are given by G ¡ = 600 − 2¢ and G £ = 30 + 4¢. a. Plot the supply and demand curves on a graph and show where the equilibrium occurs. b. Using algebra, determine the market equilibrium price and quantity for this product. 3. Suppose the demand for bagels in a local store is given by the equation G ¡ = 300 − 100¢. a. Calculate a general formula for the price elasticity of demand for bagels. b. At what price is demand unitary elastic? 4. Consider the following demand and supply relationships in the market for golf balls. G ¡ = 90 − 2¢ − 2¤ and G £ = −9 + 5¢ − 2.5¥, where T is the price of titanium, a metal used to make golf clubs, and R is the price of rubber. used to make golf clubs, and R is the price of rubber....
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This note was uploaded on 05/09/2009 for the course ECON 410 taught by Professor Codrin during the Spring '07 term at UNC.
- Spring '07
- Supply And Demand