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Econ 2200 Assignment #1 Winter 2013 Due in class: Thursday, January 24th, 2012 at 5: Assignments should be stapled and neatly written or typed. (Show...

This question was answered on Jan 23, 2013. View the Answer
this is a very simple economics questions.
please help me... this is my first time to taking economics class.
Econ 2200 Assignment #1 Winter 2013 Due in class: Thursday, January 24 th , 2012 at 5:35 Late assignments are not accepted. Assignments should be stapled and neatly written or typed. (Show all calculations) Q1. Given the demand for cheese given by the following equation: Q d = 700 − 2 P P rw + 0 . 1 I , where P is the price of cheese, P rw is the price of red wine, and I is average consumer income. a) What can you say about the cross price elasticity of the demand for cheese and the price of red wine? Based on the elasticity, are cheese and red wine demand substitutes or demand complements? Explain b) What can you say about the income elasticity of the demand for cheese when average consumer income rises? What type of good is cheese? c) Graph the demand curve for cheese when P rw = 100 and I = 10, 000. Q2. Identify three assumptions placed on consumer preferences in consumer theory and explain what each means mean about the consumer’s ability to rank any two baskets Q3. Briefly explain what convex indifference curves means in terms of marginal utility. Q4. Rob always enjoys a coffee with a muffin as he starts his day. a. Rob currently drinks one cup of coffee (C) for every muffin (M) he consumes. Graph two of Rob’s indifference curves. Place muffins on the horizontal axis. b. Write an expression to capture Rob’s preferences c. Rob becomes a bigger coffee drinker and now drinks two cups of coffee for every muffin he consumes. Graph two of Rob’s new indifference curves and write the expression to represent his preferences. Q5. Do you agree or disagree with the following statement: The price of corn has increased recently due to poor weather last summer; As a result, corn growers are expecting the demand for corn to decrease. Explain. Q6. Roger likes ice cream but he does not care whether he has more yogurt or not. Graph two of Roger’s indifference curves and indicate the direction of Roger’s preferences. Q7. Jane has a utility function that depends on the number of plays and the number of operas seen each month. Her utility function is given by U = xy 2 , where x is the number of plays seen per month and y is the number of operas seen per month. a) What is the corresponding marginal utility for each good? b) Does Jane believe that more is better for each good? c) Does Jane have a diminishing marginal utility for each good? Q8. Keira likes to take her lunch to school; however, she does not care whether she takes chicken salad (CS) or tuna (T) sandwiches since both contain the amount of protein. Place tuna sandwiches on the horizontal axis. a. Write the expression to depict Keira’s preferences. b. Draw two of Keira’s indifference curves. What is the marginal rate of substitution? Why?
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c. Keira is influenced by a new advertising campaign which convincers her that tuna sandwiches are twice as good as chicken salad sandwiches. Given this information: Write the expression to represent Keira’s new preferences. Sketch two of Keira ’s indifference curves. What is the new marginal rate of substitution?
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Econ 2200
Assignment #1 Winter 2013
Due in class: Thursday, January 24th, 2012 at
5:35
Late assignments are not accepted.
Assignments should be stapled and neatly written or
typed. (Show all...

This question was asked on Jan 22, 2013 and answered on Jan 23, 2013.

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