All exercises are available on MyEconLab; * [&|eq|&] answer at the back of this book.
*1.1 Does an increase in average income cause a shift of the demand curve for coffee or a movement along the demand curve? Explain briefly.
1.2 Given the estimated demand function Equation 2.2 for coffee, [&Q|=|8.5|-|p|+|0.1Y,&] use algebra (or calculus) to show how the demand curve shifts as per capita income, Y, increases by $10,000 a year. Illustrate this shift in a diagram.
1.3 Assume that both the U.S. and Canadian demand curves for lumber are linear. The Canadian demand curve lies inside the U.S. curve (the Canadian demand curve hits the axes at a lower price and a lower quantity than the U.S. ...