problem_set1

# problem_set1 - Econ 100 Winter 2012 Problem set 1 Due...

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1 Econ 100 Winter 2012 Problem set 1 Due Friday January 20 in Class 1. Find the derivative with respect to x for the following functions. a. ( ) 32 f x ax bx x = + + ; b. ( ) ln f x ax x = ; 2. What is the price elasticity of the demand curve Q(p) = a - b ln (p)? 3. Suppose that the demand for water balloons fit the function D(p,p s ) = D ( p , p s ) = .2 p " .5 p s " .2 where p is the price of water balloons and ps is the price of super soakers (an advanced squirt gun technology). Based upon this demand curve, are super soakers a compliment or a substitute for water balloons? Demonstrate why.

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2 4. Suppose that the current price of oil is \$60 per barrel and the quantity sold is 90 million barrels per day. Assume that the supply and demand curves for oil are linear. The current estimates of the price elasticity of supply and demand in the U.S. are η = 1 and
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## problem_set1 - Econ 100 Winter 2012 Problem set 1 Due...

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