C2_ReviewQuestions_Econ303-20101_2010-01-28

C2_ReviewQuestions_Econ303-20101_2010-01-28 - Review...

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Review Questions for Chapter 2 – Supply and Demand ECON 303 Managerial Economics, Spring 2010 Edward L. Millner , Department of Economics Copyright Millner 2009-10 Chapter 2 - Demand R2.1 Suppose that the demand curve is Q d B = 6 – 4 P x + 2 * P S + 0.5 * M where Q d B is the quantity of Bagels demanded per week, P B is the price of bagels, P S is the price of scones, and M is income. a. Do bagels obey the law of demand? How do you know? Why or why not? Explain briefly if you think that this is reasonable. b. Are bagels and scones complements or substitutes? How do you know? Explain briefly if you think that this is reasonable. c. Are bagels normal or inferior? How do you know? Explain briefly if you think that this is reasonable. d. What is the quantity of bagels demanded when P B = 3, P S = 6, and M = 20? e. What is the demand curve for bagels when P B = 3, P S = 6, and M = 20? f. What is the inverse demand curve for bagels when P B = 3, P S = 6, and M = 20?

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