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Graph the market demand curve

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Reference no: EM132511411

Suppose BJORN has $16 to spend and the following utility tables:  

Cookies                                     Bubble Tea                                 Candy Bars        

#          Total Utility                   #          Total Utility                   #          Total Utility

0          0                                  0          0                                  0          0

1          30                                 1          90                                 1          24

2          46                                 2          150                               2          40

3          60                                 3          186                               3          52

4          72                                 4          216                               4          62

5          82                                 5          240                               5          70

6          90                                 6          258                               6          76

7          96                                 7          270                               7          80

8          100                               8          276                               8          82

a) If Bjorn has $16 to spend, the price of a Cookie is $1, the price of Bubble Tea is $3, and the price of a Candy Bar is $0.50, what is his utility-maximizing bundle of goods? Show your work.

b) If the price of each Candy Bar increased to $1 each and the other prices remained the same, what would be his new utility-maximizing bundle? Show your work.

c) If the price of each Candy Bar increased to $2 each and the other prices remained the same, what would be his new utility-maximizing bundle? Show your work.

d) Given your answers above, graph Bjorn's demand curve for CANDY BARS.

e) Suppose there are 10 people in the market exactly like Bjorn. Graph the market demand curve.

  1. Suppose Ana's Price Elasticity of Demand for Pizza is 0.5. How much must prices increase in order for her to consume 10% less pizza? Is her demand elastic or inelastic?
  2. If the price of Beer is $2 a bottle, Biff is willing to buy 30 bottles. If the price of Beer is $4 a bottle, Biff is willing to buy 20 bottles. What is Biff's Price Elasticity of Demand? Is his demand elastic or inelastic?
  3. Suppose Timmy's Price Elasticity of Demand for Hot Dogs is 1.33. When the price of hot dogs is $3, Timmy is willing to buy 10. If the price of hot dogs is $5, how many hot dogs is Timmy willing to buy?
  4. For each of the following, select the demand curve that would be MORE elastic.

a) Demand for Cars or Demand for Hyundai Sonatas

b) Demand for Apple Juice or Demand for Gasoline

c) Demand for Apartments or Demand for Pencils

d) Demand for Gasoline 3 months after price change or Demand for Gasoline 6 months after price change

e) Demand for Hondas or Demand for Honda Civics

f) A normal person's Demand for Cars or Jeff Besos' Demand for Cars

Reference no: EM132511411

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