Econ 200 Homework 2 - Econ
200
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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.
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