Question

Ch 2, Problem 2.1 The demand for beer in Japan is given by the following equation: Q-700- 2P Pv + 0.11, where P is the price of beer, Pv is the price of nuts, and I is average consumer income. Assume B is a normal good What happens to the demand for beer when the price of nuts goes up? Are beer and nu a. ts demand substitutes or demand complements b. What happens to the demand for beer when average consumer income rises? c. Graph the demand curve for beer when P 100 and I 10, 000. Label axis with P on the vertical axis and Q on the horizontal axis. Indicate at what points the demand curve touches the price and quantity axis Ch 2, Problem 2.3 The demand and supply curves for coffee are given byQ 4P. 600-2P and e 300+ Plot the supply and demand curves on a graph and show where the equilibrium occurs by marking it with an E. Label the point at which either curve touches the P or Q axis. Rember price is always on the vertical axis a. b. Using algebra, determine the market equilibrium price and quantity of coffee. Indicate the equilibrium price and quantity on the graph in part a. Ch 2, Problem 2.1.3 Consider a linear demand curve,e350-7P a. Derive the inverse demand curve corresponding to this demand curve. b. What is the choke price? c. What is the price elasticity of demand at P-50?

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Answer 1