An analyst believes that an increase in temperature by 1◦C decreases the demand for small coffee...

An analyst believes that an increase in temperature by 1◦C decreases the demand for small coffee by .5%, holding everything else fixed. You may let T denote temperature in Celsius, and Q denote demand for a small coffee.

Does this statement mean the analyst believes that temperature causes demand to increase, or demand causes temperature to increase?

Write down an economic model, involving a specific equation, formalizing the statement at the beginning of the question. Please specifically use the number at the beginning of the question.

An American does not understand Celsius. Please repeat part (iii), but using Fahrenheit rather than Celsius. (The conversion is F = 32 + 9/ 5C.)

Solutions

Expert Solution

The analyst believes that an increase in temperature by 1◦C decreases the demand for small coffee by .5%, holding everything else fixed. This means that the temperature causes demand to increase if other factors are kept constant and not that demand causes temperature to increase.

Here demand of small coffee is dependent on temperature. Here demand is a function of temperature. It can be denoted as:

Q= f(T)

where Q is the demand for small coffee and T is the temperature in Celcius.

The equation explaining the statement that the analyst believes that an increase in temperature by 1◦C decreases the demand for small coffee by .5%, holding everything else fixed will be as follows:

Q- 0.5Q/100 = T+1

Where Q is the demand for small coffee and T is in the temperature in Celcius.

If the above equation is to be converted in Fahrenheit then it will be as follows:

Q-0.5Q/100=[( F-32) * 5/9 ] +1

Where Q is the quantity of small coffee and F is the Temperature in Fahrenheit.

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

1) when the price of a compliment (cream) decreases, the demand for the related good (coffee)...

1) when the price of a compliment (cream) decreases, the demand for the related good (coffee) A) will shift inward B) will fall C) will shift outward D) remains constant 2) other things being equal, an increase in wages paid to workers in firms making digital devices will cause A) the supply of digital devices to decrease B) the quantity of digital devices supplied to decrease C) the demand for digital devices to decrease D) the quantity of digital devices...

1 unit increase in price in a market decreases the demand amount by 1 unit and...

1 unit increase in price in a market decreases the demand amount by 1 unit and increases supply amount by 3 units. The autonomous demand is 48 units. While the price is zero, the average supply is -4 units. a) Calculate the values of the balance points. b) In this market, 2 unit tax has been applied for each unit of the firm sold. Calculate the values of new balance points after tax.

Both the demand and the supply of coffee decrease. Since decreases in demand and supply, considered...

Both the demand and the supply of coffee decrease. Since decreases in demand and supply, considered separately, each cause equilibrium quantity to fall, the impact of both decreasing simultaneously means that a new equilibrium quantity of coffee must be less than the old equilibrium quantity. In Panel (a), the demand curve shifts farther to the left than does the supply curve, so equilibrium price falls. If simultaneous shifts in demand and supply cause equilibrium price or quantity to move in...

1. Coffee temperature ~ The temperature of coffee served at a restaurant is approximately normally distributed...

1. Coffee temperature ~ The temperature of coffee served at a restaurant is approximately normally distributed with an average temperature of 160 degrees and a standard deviation of 5.4 degrees. a. What percentage of coffee servings are between 153 and 167 degrees? Final Answer: _______________________ b. What percentage of coffee is served at a temperature greater than or equal to 170 degrees? Final Answer: _______________________ c. What is the cutoff for the coolest 20% of coffee servings at this restaurant?

1) In a small open economy, the increase in aggregate demand resulting from an increase in...

1) In a small open economy, the increase in aggregate demand resulting from an increase in government spending is _____ if the exchange rate is ______ than if it is _______ . A) larger, flexible, fixed B) smaller, fixed, flexible C )always zero D) larger, fixed, flexible 2) In a small open economy, the increase in aggregate demand resulting from an increase in the money supply is _____ if the exchange rate is ______ than if it is _______ ....

Which of the following changes decreases the demand for money? Increase in the risk of stock...

Which of the following changes decreases the demand for money? Increase in the risk of stock market Increase in the risk of bond market Increase in the liquidity of stocks Increase in the liquidity of bonds None of the above

Moving to a small town, you get a job as a business analyst for ABC Coffee,...

Moving to a small town, you get a job as a business analyst for ABC Coffee, which happens to operate the only caf6 in town. The demand for ABC's coffee is given as: Q : 100 - P, where P is the price (in cents) charged by ABC for a cup of coffee and Q is the quantity sold per day (i.e., cups per day). Furthermore, suppose total fixed cost encountered by ABC is zero, and marginal cost (MC) equals...

Moving to a small town, you get a job as a business analyst for ABC Coffee,...

Moving to a small town, you get a job as a business analyst for ABC Coffee, which happens to operate the only caffe in town. The demand for ABC's coffee is given as: Q : 100 - P, where P is the price (in cents) charged by ABC for a cup of coffee and Q is the quantity sold per day (i.e., cups per day). Furthermore, suppose total fixed cost encountered by ABC is zero, and marginal cost (MC) equals...

A freshly brewed cup of coffee has temperature 95°C in a 20°C room. When its temperature...

A freshly brewed cup of coffee has temperature 95°C in a 20°C room. When its temperature is 74°C, it is cooling at a rate of 1°C per minute. When does this occur? (Round your answer to two decimal places.) min A population of protozoa develops with a constant relative growth rate of 0.9425 per member per day. On day zero the population consists of two members. Find the population size after five days. (Round your answer to the nearest whole number.) P(5) = members

When an increase in price of one commodity decreases the demand for another commodity (negative cross...

When an increase in price of one commodity decreases the demand for another commodity (negative cross price effect), then two commodities are substitute goods True False When the increase in price of one commodity decreases the demand for another commodity (negative cross price effect), then the two commodities are said to be complementary goods True False An increase in income of consumers will result in an increase in demand of a commodity only if, it is considered as a superior...

Subjects