Economics: Principles & Policy
14th Edition
ISBN: 9781337696326
Author: William J. Baumol; Alan S. Blinder; John L. Solow
Publisher: Cengage Learning
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Question
Chapter 1.A, Problem 1TY
To determine
Draw the graph of the given data and calculate the slope.
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Draw the graph of U = q1 + aq2 and U= q1^2 + q2^2. Interpret the parameter and shape of the curve.
1. Solve the following problem by using Excel for graph sketching.
A soda vendor at Louisiana State University football games observes that more sodas
are sold the warmer the temperature at game time is. Based on 32 home games
covering five years, the vendor estimates the relationship between soda sales and
temperature to be y = -240 + 8x, where y = the number of sodas she sells and .x =
temperature in degrees Fahrenheit,
(a) Interpret the estimated slope and intercept. Do the estimates make sense? Why,
or why not?
(b) On a day when the temperature at game time is forecast to be 80°F, predict how
many sodas the vendor will sell.
(c) Below what temperature are the predicted sales zero?
(d) Sketch a graph of the estimated regression line.
Your boss would like your help on a marketing research project she is conducting on the relationship between the price of soda and the quantity of
soda demanded. She hands you the following document:
Price of Soda
Quantity of Soda Demanded
(Dollars per can)
(Billions of cans)
0.50
2,000
0.75
1,500
1.00
1,000
1.25
750
Your task is to take this
and construct a graphical representation of the data. In doing so, you determine that as
the price of soda rises, the quantity of soda demanded decreases. This confirms the
Chapter 1 Solutions
Economics: Principles & Policy
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