Q1. Bread and cheese are often eaten together. Therefore, they are complement goods.Flour is an ingredient in producing bread. Milk is an ingredient in producing cheeseA. Explain what happens to the equilibrium price and equilibrium quantity of cheesewhen the price of milk falls. Draw a diagram for your answer.B. Explain what happens to the equilibrium price and equilibrium quantity of bread asa result of your answer in part A. Draw a diagram for your answer.Q2. The price elasticity of demand of product X is classified as unit elastic. At the priceof $9.5 per unit the quantity demanded of product X is 21. At what price per unitshould product X be selling at if the quantity demanded is 19? Explain your answer.Q3. Peter likes movies but he decides that he will spend a fixeed amount of $1,000 permonth on movie tickets, no matter what the price of per movie ticket is. Is Peter'sprice elasticity of demand on movie tickets elastic, unit elastic or inelastic? Explainyour answe

Question
Asked Oct 22, 2019
226 views

Question are pinned below

Q1. Bread and cheese are often eaten together. Therefore, they are complement goods.
Flour is an ingredient in producing bread. Milk is an ingredient in producing cheese
A. Explain what happens to the equilibrium price and equilibrium quantity of cheese
when the price of milk falls. Draw a diagram for your answer.
B. Explain what happens to the equilibrium price and equilibrium quantity of bread as
a result of your answer in part A. Draw a diagram for your answer.
Q2. The price elasticity of demand of product X is classified as unit elastic. At the price
of $9.5 per unit the quantity demanded of product X is 21. At what price per unit
should product X be selling at if the quantity demanded is 19? Explain your answer.
Q3. Peter likes movies but he decides that he will spend a fixeed amount of $1,000 per
month on movie tickets, no matter what the price of per movie ticket is. Is Peter's
price elasticity of demand on movie tickets elastic, unit elastic or inelastic? Explain
your answe
help_outline

Image Transcriptionclose

Q1. Bread and cheese are often eaten together. Therefore, they are complement goods. Flour is an ingredient in producing bread. Milk is an ingredient in producing cheese A. Explain what happens to the equilibrium price and equilibrium quantity of cheese when the price of milk falls. Draw a diagram for your answer. B. Explain what happens to the equilibrium price and equilibrium quantity of bread as a result of your answer in part A. Draw a diagram for your answer. Q2. The price elasticity of demand of product X is classified as unit elastic. At the price of $9.5 per unit the quantity demanded of product X is 21. At what price per unit should product X be selling at if the quantity demanded is 19? Explain your answer. Q3. Peter likes movies but he decides that he will spend a fixeed amount of $1,000 per month on movie tickets, no matter what the price of per movie ticket is. Is Peter's price elasticity of demand on movie tickets elastic, unit elastic or inelastic? Explain your answe

fullscreen
check_circle

Expert Answer

star
star
star
star
star
1 Rating
Step 1

“Hello, thank you for the question. Since there are multiple questions posted, we will answer the first question. If you want any specific question to be answered then please submit that question only or specify the question number in your message.”

Step 2

The complementary goods are those goods which have a negative cross elasticity. This means that when the price of good increases, the demand for the complementary good would also fall and vice versa. Thus, there will be negative cross elasticity in the economy for the complement goods. In this case, the bread and cheese are consumed together and not separately which means that they are complementary goods such as the pen and ink.

Step 3

Milk is an important component used for the making of cheese in the economy. Thus, milk is the raw material needed to make cheese. When the price of milk falls, the raw material cost to make cheese falls in the economy. As a result of fall in the cost of production, the cheese making would become cheaper and thi...

fullscreen

Want to see the full answer?

See Solution

Check out a sample Q&A here.

Want to see this answer and more?

Solutions are written by subject experts who are available 24/7. Questions are typically answered within 1 hour.*

See Solution
*Response times may vary by subject and question.
Tagged in

Business

Economics

Consumer demand theory

Related Economics Q&A

Find answers to questions asked by student like you
Show more Q&A
add
question_answer

Q: 5. LO 4 Suppose, as in the federal income tax code for the United States, that the representative co...

A: Case 1In the first case when consumers do not pay taxes earlier, a reduction in tax deduction can ha...

question_answer

Q: Given that: U(X,Y) = X1/2+Y1/2 and the demand functions are: X=0.218I Y=0.152I   When I = 50, X = 10...

A: The marginal utility of income refers to the additional utility derived from the increase or decreas...

question_answer

Q: Anatoly's marginal utility for DVDs​ (D) is MUD= X and his marginal utility for Xbox games​ (X) is M...

A: The optimization rule to maximize consumer satisfaction is

question_answer

Q: Why doesn’t the change to equilibrium happen immediately when there is surplus in the market?

A: Demand: It refers to the quantity of a commodity that the consumer is willing and able to purchase a...

question_answer

Q: (Figure: Supply Tax) In the accompanying pizza market, with a $2 tax imposed on the sellers, how muc...

A: In this graph the initial equilibrium is at e where the price is $10 and quantity is 50 units. As a ...

question_answer

Q: List at least 3 factors that have accounted for the rapid growth of world trade over the past 50 yea...

A: Answer - There are many factors that have accounted for the rapid growth of world trade over the pas...

question_answer

Q: plans are underway for a new stadium for a baseball team. City officials question the number and pro...

A: Given fixed cost = $4,500,000 , Variable cost = $ 150,000Customer may Purchase at $300,000

question_answer

Q: suppose that at a price index of 154 the quantity demand of u.s. real GDP is 10.0 trillion worth of ...

A: Aggregate demand is expressed as the combinations of total demand for finished goods and services th...

question_answer

Q: What effect do you think this federal government shutdown may have had on the Keynesian C + I + G + ...

A: To determine the impact of federal government shutdown on C + I + G + NX (Aggregate Expenditure) cur...