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In: Economics

1.The demand function for wingdongs is as follows: Qdw= 130 –2Pw+ 0.5Pb+ 0.25Y where Qdw= quantity...

1.The demand function for wingdongs is as follows:

Qdw= 130 –2Pw+ 0.5Pb+ 0.25Y

where Qdw= quantity of wingdongs demanded, Pw=price of wingdongs, Pb= price of billbongs, andY = income.

a.Suppose Pb= 10and Y= 60. Solve for the demand curve for wingdongs and graph it. Be sure to label your graph appropriately

b.The supply function for wingdongs is as follows:Qsw= Pw-30Graph the supply curve (on the same graph as above) and solve for the equilibrium price and quantity of wingdongs. Illustrate this equilibrium in the graph

c.Calculate the own-price elasticity of demand for wingdongs at this equilibrium. Is the demand for wingdongs elastic, inelastic or unit elastic at this equilibrium?

d.Calculate the cross-price elasticity of demand for wingdongs with respect to theprice of billbongs at this equilibrium. Are wingdongs and billbongs substitutes or complements?

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Expert Solution

Rahul Sunny answered 1 year ago
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