1. Chez What recently opened a stand in between the Commons and the Library. They sell mostly breakfast items, particularly coffee, and croissants. The operators are particularly concerned about the demand for croissants. In an effort to assess the wisdom of their pricing strategy, they asked an economist client to estimate the demand for croissants sold at Chez What. He came with the following information. Q=150-50P - 20Pc +30Pa Where P = the price of croissants, P. = the price of coffee sold at Chez What, and Pa the price of coffee sold at the nearby Alpine bagel bakery a. Suppose that the price of coffee at Chez What is $1.5 and that the price of coffee at the Alpine Bagel Bakery is $2 per cup. Calculate the demand curve for croissants.

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Chapter1: Making Economics Decisions
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1. Chez What recently opened a stand in between the Commons and the Library. They
sell mostly breakfast items, particularly coffee, and croissants. The operators are
particularly concerned about the demand for croissants. In an effort to assess the wisdom
of their pricing strategy, they asked an economist client to estimate the demand for
croissants sold at Chez What. He came with the following information.
Q = 150-50P - 20Pc +30P₂
Where P = the price of croissants, P. = the price of coffee sold at Chez What, and Pa the
price of coffee sold at the nearby Alpine bagel bakery
a. Suppose that the price of coffee at Chez What is $1.5 and that the price of coffee
at the Alpine Bagel Bakery is $2 per cup. Calculate the demand curve for
croissants.
Transcribed Image Text:1. Chez What recently opened a stand in between the Commons and the Library. They sell mostly breakfast items, particularly coffee, and croissants. The operators are particularly concerned about the demand for croissants. In an effort to assess the wisdom of their pricing strategy, they asked an economist client to estimate the demand for croissants sold at Chez What. He came with the following information. Q = 150-50P - 20Pc +30P₂ Where P = the price of croissants, P. = the price of coffee sold at Chez What, and Pa the price of coffee sold at the nearby Alpine bagel bakery a. Suppose that the price of coffee at Chez What is $1.5 and that the price of coffee at the Alpine Bagel Bakery is $2 per cup. Calculate the demand curve for croissants.
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Step 1

Demand curve shows an inverse relationship between price and quantity demanded. It steps slopes downward. Increase in price will decrease quantity demanded.

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