Econ 101 Winter 2010 Problem Set 7

Econ 101 Winter 2010 Problem Set 7 - Economics 101...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Problem Set 7 February 25 & 26 University of Michigan Winter 2010 Economics 101 Microeconomics
Background image of page 1

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

View Full DocumentRight Arrow Icon
Econ 101.400 Winter 2010 Question One Suppose the following describes demand for frosted shredded wheat squares in a various regions, over the course of a month: Q d i = 1250 – 300 P i + 25 Y i + 1000 Pop i + 100 P c i – 50 P m i . In this function, Q d i is the quantity of frosted shredded wheat squares demanded in the month in region i (measured in hundreds of boxes), P i is the price of frosted shredded wheat squares in region i (measured in $/box), Y i is median household income in region i (measured in thousands of dollars per annum), Pop i is the population in region i (measured in millions), P c i is the price of cornflakes in region i (measured in $/box) and P m i is the price of milk in region i (measured in $/gallon). (a) Are cornflakes a complementary or substitute product for frosted shredded wheat squares? How do you know? Is this what you would have expected? (b) Is milk a complementary or substitute product for frosted shredded wheat squares? How do you know? Is this what you would have expected? (c) Suppose the following is known about Region 1: median income is $40,000 per annum, population is five hundred thousand, cornflakes cost $4/box and milk costs $3/gallon. Write quantity of frosted shredded wheat squares demanded only as a function of price. Also draw the demand curve. (d) If the price of frosted shredded wheat squares is $5/box, how many boxes of frosted shredded wheat squares will be demanded this month in Region 1? What is the price elasticity of demand for frosted shredded wheat squares in
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 04/20/2010 for the course ECON 101 taught by Professor Gerson during the Winter '08 term at University of Michigan.

Page1 / 5

Econ 101 Winter 2010 Problem Set 7 - Economics 101...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online