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Copyright 2815. Lexington Books.All rights reserved. May not be repreduced in a2.6iscuss theuf California wine.2.7 The market demand for Brand x has been estimated astQ=1,500-3P-0.05M 2.5P +7.5Pywhere P, is the price of Brand x. M per capita incom, P, the price ofBrand y, and P. the price of Brand z. Assume that P =2, M $20,000,P $4, and P. $4.a. With respect tu changes in per capila income, w at kind of goodis Brand x?xb. How are Brands x and y related?EBSCO eBook Collection (EBSCOhost) printed on 8/20/2019 7:18 AM via SHRI ATA VAISHNO DEVIUNIVERSITYAN: 935122 Webster, Thomas J.; Managerial Economics Tools for Analyzing usiness StrategyAccount: ns176013.main.ehost ion from the publisher. except fair uses permitted under U.S. or applicable copyright law.Demund and Supply51C. How are Brands x and z related?d. How are Brands z and y related?e. What is the market demand for Brandx!2.8 Yell- Yew-Boats, Ltd. produccs Blue Mcanics. Consider the demandand supply equations for Blue Meanies:O150-2P +0.00.LM+1.5PQ=60+ 4P-2.5W,where Q is munthly per family consumption of Blue Meanies, P, theprice per unit of Blue Meanies, M median annual per family income($25,000), P, the price per unit of Apple Bonkers ($5.00) and W thehourly per worker wage rate ($8.60).a. W at type of good is Apple Bonkers?b. W at are the equilibrium price and quantity of Blue Meanies?c. Suppose that median per family income increases by $6,000. Whatare the new equilibrium price and quantity of Blue Meanies?d. Su pose that in addition to the increase in median per familyincome, collective bargaining by Bluc Mcanic Local # 1 results ina $.40 hourly increase in the wage rate. What are the new equilib-rium price and quantity?e. Ina same diagram, illustrate your answers to parts b, c, and d.

Question

Question number 2.7 and 2.8

Copyright 2815. Lexington Books.
All rights reserved. May not be repreduced in a
2.6
iscuss the
uf California wine.
2.7 The market demand for Brand x has been estimated ast
Q=1,500-3P-0.05M 2.5P +7.5P
y
where P, is the price of Brand x. M per capita incom, P, the price of
Brand y, and P. the price of Brand z. Assume that P =2, M $20,000,
P $4, and P. $4.
a. With respect tu changes in per capila income, w at kind of good
is Brand x?
x
b. How are Brands x and y related?
EBSCO eBook Collection (EBSCOhost) printed on 8/20/2019 7:18 AM via SHRI ATA VAISHNO DEVI
UNIVERSITY
AN: 935122 Webster, Thomas J.; Managerial Economics Tools for Analyzing usiness Strategy
Account: ns176013.main.ehost
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Copyright 2815. Lexington Books. All rights reserved. May not be repreduced in a 2.6 iscuss the uf California wine. 2.7 The market demand for Brand x has been estimated ast Q=1,500-3P-0.05M 2.5P +7.5P y where P, is the price of Brand x. M per capita incom, P, the price of Brand y, and P. the price of Brand z. Assume that P =2, M $20,000, P $4, and P. $4. a. With respect tu changes in per capila income, w at kind of good is Brand x? x b. How are Brands x and y related? EBSCO eBook Collection (EBSCOhost) printed on 8/20/2019 7:18 AM via SHRI ATA VAISHNO DEVI UNIVERSITY AN: 935122 Webster, Thomas J.; Managerial Economics Tools for Analyzing usiness Strategy Account: ns176013.main.ehost

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ion from the publisher. except fair uses permitted under U.S. or applicable copyright law.
Demund and Supply
51
C. How are Brands x and z related?
d. How are Brands z and y related?
e. What is the market demand for Brandx!
2.8 Yell- Yew-Boats, Ltd. produccs Blue Mcanics. Consider the demand
and supply equations for Blue Meanies:
O150-2P +0.00.LM+1.5P
Q=60+ 4P-2.5W,
where Q is munthly per family consumption of Blue Meanies, P, the
price per unit of Blue Meanies, M median annual per family income
($25,000), P, the price per unit of Apple Bonkers ($5.00) and W the
hourly per worker wage rate ($8.60).
a. W at type of good is Apple Bonkers?
b. W at 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. Su pose that in addition to the increase in median per family
income, collective bargaining by Bluc Mcanic Local # 1 results in
a $.40 hourly increase in the wage rate. What are the new equilib-
rium price and quantity?
e. Ina same diagram, illustrate your answers to parts b, c, and d.
help_outline

Image Transcriptionclose

ion from the publisher. except fair uses permitted under U.S. or applicable copyright law. Demund and Supply 51 C. How are Brands x and z related? d. How are Brands z and y related? e. What is the market demand for Brandx! 2.8 Yell- Yew-Boats, Ltd. produccs Blue Mcanics. Consider the demand and supply equations for Blue Meanies: O150-2P +0.00.LM+1.5P Q=60+ 4P-2.5W, where Q is munthly per family consumption of Blue Meanies, P, the price per unit of Blue Meanies, M median annual per family income ($25,000), P, the price per unit of Apple Bonkers ($5.00) and W the hourly per worker wage rate ($8.60). a. W at type of good is Apple Bonkers? b. W at 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. Su pose that in addition to the increase in median per family income, collective bargaining by Bluc Mcanic Local # 1 results in a $.40 hourly increase in the wage rate. What are the new equilib- rium price and quantity? e. Ina same diagram, illustrate your answers to parts b, c, and d.

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Step 1

Answer - Dear student thank you for submitting your question .Since we answer only one of the multiple questions .Please resubmit the other question which you'd like to answered .

Q.2.7

Answer - Dear student Thank you for submitting your question .Since we only answer up to three sub parts we will answer the first three .Please resubmit the question and specify other sub-parts (up to 3) you'd like to answered.

Given in the question-

Price of the Brand " x" (Px) = $2

Price of the Brand "y" (Py) = $4

Price of the Brand "z" (Pz) = $4

Per capita income (M) = $20,000

Equation for market demand for Brand "x" 

Q" = 1500-3P-0.05M-2.5P +7.5P......)
y
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Q" = 1500-3P-0.05M-2.5P +7.5P......) y

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Step 2

Part (a) 

Solution -  To answer this question we are going to consider "2" cases 

1. When "M" will incerase

2.When "M" will decrease

From the equation "1" we can see that cofficient of "M" is negative So,

Case (1)

When "M" will increase 

when "M" increase overall demand of brand "x" will decrease 

Similarly,

when "M" decrease overall demand of brand "x" will increase .

Both cases suggest that Brand "x" is inferior good 

Now , comparing result of above cases with definition of "inferior good".

"Those goods whose demand wiil  go down with increase in income and demand will go up with decrease in income are called inferior good"

After camparing  we can say that Brand "x" is inferior good.

Step 3

Part (b)-

Solution - From the equation "1" we can see that 

The cofficients of "Px" and  "Py" both are negative 

So, with increase in price of Brand "Y" negatively affect the demand of Brand "x"

And   With decrease in price of Brand "Y" positively affect the demand of  Brand "x"

This means that Brand "x" and Brand "y" are  complement goods 

Now, Comparing above cases with defini...

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