This preview shows pages 1–3. Sign up to view the full content.
ECN101 Intermediate Macroeconomics
Winter 2009
Professor E.A.Frenkel
Homework 1 – Solutions
(2).
To better understand the role between exogenous and endogenous variables in a
typical economic theory diagram, please draw four graphs that show the influence of each
of the the following variables on the quantity of BaskinRobbins Jamoca Almond Fudge
ice cream flavor demanded in the United States (place quantity of ice cream demanded on
the "X" axis):
SOLUTION
:
for the following relations, we assume a simply linear demand curve
.
The price of this ice cream flavor.
The average income of the consumer of this ice cream flavor.
The average price of frozen yogurt (an ice cream substitute).
Q
ice cream
Income
Q
ice cream
P
ice cream
Q
ice cream
P
yogurt
This preview has intentionally blurred sections. Sign up to view the full version.
View Full Document The price of green tea in Sydney, Australia.
This exercise shows that there are different ways of trying to explain the same thing on
the twodimensional graph (the quantity of ice cream demanded).
Each of your graphs
will say something about the quantity demanded of ice cream and some other important
(or less important) variable in the economy.
For each of the four graphs, the two
variables on the axes are the endogenous variables whose relationship is explained
This is the end of the preview. Sign up
to
access the rest of the document.
This note was uploaded on 01/16/2011 for the course ECN 101 taught by Professor Frenkel during the Winter '10 term at UC Davis.
 Winter '10
 FRENKEL
 Macroeconomics

Click to edit the document details