midterm2reviewpart2 - Review Problems Midterm 2: Part 2...

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Review Problems Midterm 2: Part 2 Economics 304K: Principles of Microeconomics Prof. Meg Ledyard You do not need to turn these in, but you would be well advised to go through these questions, and be able to answer them. 1. Bobby only eats bratwurst on a bun. He must eat exactly one bun with every bratwurst. a. Using diagrams, derive the demand curve for bratwurst. b. Suppose that the price for buns increases. Derive a new demand curve for bratwurst. What has happened to demand curve for bratwurst (Did it remain the same or shift? If it shifts, which way does it go?) c. Now, suppose instead that Bobby is deciding which size bratwurst to buy. He can buy 8 for $8 or 16 for $10. He has $80 to spend. How much of each size will he buy? (Use a diagram to show this. d. Derive the demand curve for the package of 8 bratwurst. (Hint: There will be a price so that he switches which size he will buy, and the demand will be zero on one side of that price.) 2. Suppose that Vanessa runs a company that makes fake hips.
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This note was uploaded on 09/14/2009 for the course ECON 304K taught by Professor Ledyard during the Fall '08 term at University of Texas at Austin.

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midterm2reviewpart2 - Review Problems Midterm 2: Part 2...

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