Problem on market demand for chewing gum

The market demand for the chewing gum is as:

Q_G = 300 – 40P_G – 8P_S + 0.05I

Here:
Q_G = Quantity of gum demanded
P_G = price of gum
P_S = price of soda
I = average income in the market

Suppsoe that P_G = $2, P_S = $3, and I = $35

a. How much gum is required or demanded?

b. Determine the cross-price elasticity of demand between soda and gum?

c. Are soda and gum complements or substitutes ? And how do you know?

View Complete Question

Related Questions in Microeconomics

Q : Burgeoning probably interest rate The

The interest rate will most likely rise when: (1) households decide to delay consumption, causing the loanable funds accessible for business investments to raise. (2) investors become more optimistic into relation with the profitability of investment.

Q : Transformation of Predictable Income

The transformation of predictable income streams within wealth is termed as: (i) monetization. (ii) financial arbitrage. (iii) capitalization. (iv) seignorage. (v) capital accumulation. How can I solve my E

Q : Determinants of Demand-Change in price

Can someone help me in finding out the right answer from the given options. Demand curve for the DVD players would not be shifted by the change in price of: (1) Downloaded music. (2) CD players. (3) Compact disks. (4) DVD players.

Q : Illustration of most complete monopoly

The most complete monopoly by the given list would be: (1) McDonald’s dominance in marketing fast food burgers. (2) the Federal Reserve System [i.e., an arm of the government] issuing all US currency. (3) limiting subsidized low tuitions at stat

Q : Problem on mutual funds Provide

Provide solution of this question. Supposing no other changes, if balances in small time deposits increase by $30 billion and money market mutual funds held by businesses decrease by $30 billion, the: A) M1 and M2 money supplies will not change. B) M2 and MZM money su

Q : Less present value by given price When

When the market interest rate exceeds the rate of return you compute on an asset: (i) competition for profit must make its price rise quickly. (ii) its present value is less than its price. (iii) the market is in long term equilibrium

Q : Quantity demanded of good What cause do

What cause do heterodox economists employ to argue that the quantity demanded of good is a not a function of its price but of the family’s (consumer’s) income? And also discuss, For heterodox economists, household choice is not regarding maximizing utility

Q : Reduction of consumption of Inferior

Brian, a poor college student, eats pinto beans or Ramen Noodles for dinner every night. After the graduation, he takes a job with a beginning salary of $50,000 per year. This modification in income is most probable to: (1) Decrease his consumption of both the product

Q : Effect of purchasing goods to

Most of the people can’t modify relative market prices however have a little control over the relative subjective prices of the goods they consume. They are most probable to make market prices and subjective prices compatible when they: (i) Raise purchases of go

Q : Shutdown point of purely competitive

A purely competitive firm will shut down while: (w) marginal costs exceed marginal revenues. (x) this cannot cover its fixed costs. (y) marginal revenue falls below average total costs (z) this can’t cover its variable costs.

Discover Q & A

Leading Solution Library

Avail More Than 1431869 Solved problems, classrooms assignments, textbook's solutions, for quick Downloads

No hassle, Instant Access

Start Discovering

18,76,764

1958208
Asked

3,689

Active Tutors

1431869

Questions
Answered

Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!

Submit Assignment