13. Consider the following demand curves for cheese for Salem and Omar: Salem: P= 150-5Qs Omar: P= 100- 2Qo a) Find out the aggregate demand. b) Find the price elasticity of demand for Salem when P=10. 14. Tom and Jerry are friends who can produce only 2 goods, oranges and apples. Tom can produce 30 oranges and 0 apples, 20 apples and 0 oranges or any linear combination of the two points. Jerry can produce 20 oranges and 0 apples, 20 apples and 10 oranges or any linear combination of the two points. After that Jerry gets tired and from that point onwards every unit of apple costs him 2.5 oranges. a) Suppose Tom and Jerry are producing only oranges. If they have to produce 1 apple, who should produce it? Explain. b) Suppose Tom and Jerry are producing only apples. If they have to produce 1 orange, who should produce it? Explain.
13. Consider the following demand curves for cheese for Salem and Omar: Salem: P= 150-5Qs Omar: P= 100- 2Qo a) Find out the aggregate demand. b) Find the price elasticity of demand for Salem when P=10. 14. Tom and Jerry are friends who can produce only 2 goods, oranges and apples. Tom can produce 30 oranges and 0 apples, 20 apples and 0 oranges or any linear combination of the two points. Jerry can produce 20 oranges and 0 apples, 20 apples and 10 oranges or any linear combination of the two points. After that Jerry gets tired and from that point onwards every unit of apple costs him 2.5 oranges. a) Suppose Tom and Jerry are producing only oranges. If they have to produce 1 apple, who should produce it? Explain. b) Suppose Tom and Jerry are producing only apples. If they have to produce 1 orange, who should produce it? Explain.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:13. Consider the following demand curves for cheese for Salem and Omar:
Salem: P= 150-5Qs
Omar: P= 100- 2Qo
a) Find out the aggregate demand.
b) Find the price elasticity of demand for Salem when P=10.
14. Tom and Jerry are friends who can produce only 2 goods, oranges and apples. Tom can produce
30 oranges and 0 apples, 20 apples and 0 oranges or any linear combination of the two points. Jerry
can produce 20 oranges and 0 apples, 20 apples and 10 oranges or any linear combination of the two
points. After that Jerry gets tired and from that point onwards every unit of apple costs him 2.5
oranges.
a) Suppose Tom and Jerry are producing only oranges. If they have to produce 1 apple, who
should produce it? Explain.
b) Suppose Tom and Jerry are producing only apples. If they have to produce 1 orange, who
should produce it? Explain.
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