Econ 200 Homework 2 - Econ
200
Homework
2
 
 
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Unformatted text preview: Econ
200
Homework
2
 
 
 
 
 
 1. You
are
trying
to
reduce
the
amount
you
spend
in
a
typical
month.

When
you
make
a
 budget
of
your
expenses,
you
notice
that
you
spend
less
on
groceries
than
rent,
alcohol,
 books
or
clothes.

Since
this
is
the
smallest
portion
of
your
budget,
you
decide
it
would
 be
the
easiest
to
drop
from
your
spending.

Explain
why
this
is
or
is
not
‘economic’
 reasoning
using
the
concepts
we
have
discussed
in
class
so
far.
 
 
 2. The
price
of
a
single
UW
football
ticket
can
be
over
$70.

The
price
of
a
typical
concert
 downtown
is
$15‐$25.

Does
this
mean
that
Seattleites
are
bigger
sports
fans
than
music
 fans?

Use
graphs
to
illustrate
your
answer.
 3. In
1950,
6
bottles
of
Coke
cost
$0.37.

Today
one
20oz
bottle
can
cost
$1.50.

Coke
 consumption
per
person
has
actually
increased
over
the
last
60
years,
even
with
though
 prices
have
increased
dramatically.

How
do
you
reconcile
this
with
the
law
of
demand?
 
 
 4. Come
up
with
one
good
for
which
your
demand
is
elastic
for
one
that
is
inelastic,
and
 explain
why.
 
 
 5. What
is
your
demand
more
elastic
for,
fruit
or
oranges?
 6. The
following
is
Jen’s
demand
for
boots
 
 
 
 
 
 
 
 
 
 
 
 
 a. Calculate
her
elasticity
of
demand
when
the
price
is
$80.
Is
her
demand
elastic
or
 inelastic?
 b. Calculate
her
elasticity
of
demand
when
the
price
is
$40.
Is
her
demand
elastic
or
 inelastic?
 
 7. Jack’s
elasticity
of
demand
for
chicken
is
‐2.

If
Jack
is
currently
consuming
2
lbs
of
 chicken
a
week
and
the
price
increases
from
$4/lb
to
$6/lb,
how
much
chicken
will
he
 consume
per
week?

 
 8. Liz
drives
to
work
every
day.
Suddenly
gas
prices
quadruple.
Liz
still
has
to
get
to
work,
 though,
so
she
doesn’t
change
her
gas
consumption
at
all
that
week.
 a. What
must
be
true
of
her
elasticity
of
demand
 b. How
do
you
think
her
elasticity
and
consumption
might
change
over
the
next
 couple
months?


 
 9. UW
is
raising
tuition
rates
to
make
up
for
lost
state
funding.


 a. What
must
be
true
of
student’s
demand
for
a
UW
education
if
the
tuition
 increase
will
actually
increase
revenue?
Explain.

 b. Do
you
think
the
tuition
rate
increase
would
raise
as
much
revenue
if
Oregon
 schools
offered
in‐state
tuition
to
Washington
students?

Explain.

 ...
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This note was uploaded on 02/06/2010 for the course ECONOMICS 200 taught by Professor Stiban,f during the Winter '10 term at University of Warsaw.

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