Bashayer Aldosari - 443004199
Raghad Almutairi - 442003404
Rinad Aldayel - 442004583
Lena alshaya - 443004295
Reem alrshoudi - 443004252
Group Assignment
Chapter 2
1. Assume the supply function of ice cream is written as: Qs = 100 + 20P - 10Pm, where Qs
is the quantity supplied, P is price of ice cream, and Pm is the price of milk ($/gallon). If milk
price increases by $2/gallon due to the policy change, how will the Qs change?
If the price of milke increased by $2, the
quantity supply will decrease by 20
2. Assume the supply function of ice cream is written as: Qs = 100 + 20P - 10Pm, where Qs
is the quantity supplied, P is price of ice cream, and Pm is the price of milk ($/gallon). If milk
price is held fixed at $4/gallon, what is the slope of supply function for ice cream?
3. The demand for pizzas in a large town is written as: Qd = 120 - 10P + 5Pb - 0.5Ps - 10Y,
where Qd is the quantity demanded, P is the price, P b is the price of burritos, Ps is the price
of soft drinks sold in the pizza restaurants, and Y is personal income per month (in thousand
dollars). What is ∆Q/∆Ps?
4. The figure below shows a graph of the market for pizzas in a large town. No pizzas will
be supplied unless the price is above:
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5. Suppose the demand function for a good is expressed as Q = 100 - 4p. If the good
currently sells for $10, calculate the price elasticity of demand.
6. The market demand for wheat is Q = 100 - 2p + 1pb + 2Y. If the price of wheat, p, is $2,
and the price of barley, pb, is $3, and income, Y, is $1000, Find the income elasticity of
wheat.