--%>
Assignment Help - homework help

Problem on cross-price elasticity

Kathy purchases two goods, t-shirts and caps.  Her demand for t-shirts is:

Qt = 44 – 3Pt - Pc + .04I

The price of caps is Pc = $2. And her income is I = $300.

a. Graph a demand curve for Kathy’s t-shirts.

b. Determine the number of t-shirts will Kathy buy if the price of t-shirts is Pt = $5?

c. Determine the number of caps will she buy at such prices and her present income? 

d. An increase in the price of caps will outcome in (circle one):

  • Kathy’s demand for t-shirts will shift out away from the origin
  • Kathy’s demand for t-shirts will shift in towards the origin
  • Kathy will move down along her demand curve for t-shirts
  • Can’t tell; it depends on whether or not caps are a normal good to Kathy

e.Determine the cross-price elasticity of the demand for t-shirts with respect to the price of caps?

f. Are caps and t-shirts complements or substitutes? And how do you know?

   Related Questions in Microeconomics

  • Q : Moderately increasing costs When this

    When this purely competitive industry is described by moderately increasing costs, in that case line C would represent: (w) the demand curve facing the entire industry as a whole. (x) market-period supply. (y) long-run market supply. (z) short-run sup

    		•
  • Q : Markets which are relevant for human

    All markets which are really relevant for human beings are exemplified by: (1) Extensive advertising, sales promotions and marketing. (2) Demands from each and every individual for all products. (3) Potential buyers willing to reimburse and potential

    		•
  • Q : Alfred Marshall categorization of

    If Alfred Marshall categorized the analytical periods of time, he supposed that in short run it is: (i) Not possible to vary technology and at least one resource is fixed and hence at least one kind of cost is as well fixed. (ii) Possible to move the resources from on

    		•
  • Q : Define cost Cost : This refers to the

    Cost: This refers to the money expenses acquired on the production of a specified amount of commodity.

    		•
  • Q : Problem Regarding to Contestable Markets

    Even though the concentration ratio for an oligopoly is close to hundred, firms may operate rather efficiently when the market: (1) price conforms to a limit pricing model. (2) is contestable since entry and exit are easy. (3) demand curve is unitaril

    		•
  • Q : Yellow dog contracts-collective

    The summation of monopolistic exploitation across all the workers tends to raise however a firm as well operates at a more communally and economically proficient level of output and employment whenever the firm is capable to engage in: (i) Black-listing in its dealing

    		•
  • Q : Features of monopolistic competition

    Why Features of monopolistic competition is monopolist in nature? Answer: (a) Control over price (b) Downward sloping demand curve

    		•
  • Q : Union-Nonunion Wage Differentials I

    I have a problem in economics on Union-Nonunion Wage Differentials. Please help me in the following question. All else equivalent, when employment in an industry raises, the average wage differential gap among union and non-union workers: (1) Narrows.

    		•
  • Q : Profit-maximizing lumber on the average

    On the average, that profit-maximizing lumber mill as in demonstrated graph is: (w) making an economic profit of regarding $0.20 (20¢) per 2×4. (x) incurring variable costs of $0.90 (90¢) per 2×4. (y) suffering an accounting loss

    		•
  • Q : Large numbers of potential sellers in

    Features of pure competition do not comprise: (w) homogeneous products.(x large numbers of potential buyers. (y) important barriers to entry. (z) large numbers of potential sellers. Can anybody suggest me the prope

    		•