3.1 Yell-O Yew-Boats, Ltd. produces a popular brand of pointy birds called Blue Meanies. Consider the demand and supply equations for Blue Meanies: QD. = 150 – 2P, +0.0011 +1.5P, Qsx = 60+ 4P, – 2.5W where Q, = monthly per-family consumption of Blue Meanies P, = price per unit of Blue Meanies I = median annual per-family income = $25,000 P, = price per unit of Apple Bonkers $5.00 W = hourly per-worker wage rate = $8.60 a. What type of good is an Apple Bonker? b. What are the equilibrium price and quantity of Blue Meanies? c. Suppose that median per-family income increases by $6,000. What are the new equilibrium price and quantity of Blue Meanies? d. Suppose that in addition to the increase in median per-family ncome, collective bargaining by Blue Meanie Local #666 resulted in CHAPTER EXERCISES 143 a $2.40 hourly increase in the wage rate. What are the new equilib rium price and quantity? e. In a single diagram, illustrate your answers to parts b, c, and d.
3.1 Yell-O Yew-Boats, Ltd. produces a popular brand of pointy birds called Blue Meanies. Consider the demand and supply equations for Blue Meanies: QD. = 150 – 2P, +0.0011 +1.5P, Qsx = 60+ 4P, – 2.5W where Q, = monthly per-family consumption of Blue Meanies P, = price per unit of Blue Meanies I = median annual per-family income = $25,000 P, = price per unit of Apple Bonkers $5.00 W = hourly per-worker wage rate = $8.60 a. What type of good is an Apple Bonker? b. What are the equilibrium price and quantity of Blue Meanies? c. Suppose that median per-family income increases by $6,000. What are the new equilibrium price and quantity of Blue Meanies? d. Suppose that in addition to the increase in median per-family ncome, collective bargaining by Blue Meanie Local #666 resulted in CHAPTER EXERCISES 143 a $2.40 hourly increase in the wage rate. What are the new equilib rium price and quantity? e. In a single diagram, illustrate your answers to parts b, c, and d.
Chapter5: Income And Substitution Effects
Section: Chapter Questions
Problem 5.13P
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Transcribed Image Text:3.1 Yell-O Yew-Boats, Ltd. produces a popular brand of pointy birds
called Blue Meanies. Consider the demand and supply equations for Blue
Meanies:
QD. = 150 – 2P, +0.0011+1.5P,
Qs.x = 60+4P, - 2.5W
where Q, = monthly per-family consumption of Blue Meanies
P = price per unit of Blue Meanies
I = median annual per-family income = $25,000
P, = price per unit of Apple Bonkers = $5.00
W = hourly per-worker wage rate = $8.60
a. What type of good is an Apple Bonker?
b. What are the equilibrium price and quantity of Blue Meanies?
c. Suppose that median per-family income increases by $6,000.
What are the new equilibrium price and quantity of Blue Meanies?
d. Suppose that in addition to the increase in median per-family
ncome, collective bargaining by Blue Meanie Local #666 resulted in
CHAPTER EXERCISES
143
a $2.40 hourly increase in the wage rate. What are the new equilib
rium price and quantity?
e. In a single diagram, illustrate your answers to parts b, c, and d.
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