hw1 - Homework Solutions for Homework 1 Chapter 1, Question...

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Homework Solutions for Homework 1 Chapter 1, Question 1 1a: False. Each individual franchise is only competing for local food con- sumption; people in far away cities aren’t choosing between the same set of restaurants, so those restaurants aren’t competing with one another. 1b:False. The people in Los Angeles aren’t shopping at the same stores as the people in Atlanta, but they may well be being the same clothes from the same manufacturers; these manufacturers are trying to sell to the same consumers, whether in LA or Atlanta, so the clothing market is not distinct. 1c: This may be true, but for many consumers Coke and Pepsi are close substitutes. If there are many people like this, then there is a single market for colas. It depends on the degree to which they are substitutes. Chapter 2, Question 1 1a:In this problem, Income is a part of demand. Plugging in I = 25 , we have: Q s = Q D 3 P - 50 = 300 - 2 P + 4(25) P * = 90 , and from this, Q * = 220 . 1b: If
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This note was uploaded on 09/23/2010 for the course ECON 302 taught by Professor Avrin-rad during the Spring '09 term at University of Illinois, Urbana Champaign.

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hw1 - Homework Solutions for Homework 1 Chapter 1, Question...

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