The following is a hypothetical estimate of a demand curve for butter over the period 2001-10. Qu = 145 – 1.5P-0.001r+2P. Where Qa is the quantity of butter sold in grams per person per week; Pis the price of butter (in pence per kg, at 2000 prices); Yis the annual disposable income per head (in £s at 2000 prices); Pa is the price of margarine (in pence per kg, at 2000 prices). (a) If Pis 50 pence, Yis £20 000 and Pa is 40 pence, what is the estimated value of Q? (b) If the price of buttr went up by 6 pence per kilo, all other things equal, what would happen to the estimated demand for butter? Going back to the original price of 50 pence, if the value of Y now rose to £22,000 what would happen to the estimated demand for butter?

The following is a hypothetical estimate of a demand curve for butter over the period 2001-10. Qu = 145 – 1.5P-0.001r+2P. Where Qa is the quantity of butter sold in grams per person per week; Pis the price of butter (in pence per kg, at 2000 prices); Yis the annual disposable income per head (in £s at 2000 prices); Pa is the price of margarine (in pence per kg, at 2000 prices). (a) If Pis 50 pence, Yis £20 000 and Pa is 40 pence, what is the estimated value of Q? (b) If the price of buttr went up by 6 pence per kilo, all other things equal, what would happen to the estimated demand for butter? Going back to the original price of 50 pence, if the value of Y now rose to £22,000 what would happen to the estimated demand for butter?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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