A change in which of the following will cause a change in the quantity demanded of coffee?

-Consumer income.

-The price of green tea, the substitute for coffee.

-The number of coffee consumers

-The price of coffee

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Alice SejakeLv10

23 Sep 2020

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A change in which of the following will cause a change in the quantity demanded of coffee?

a) Income of the consumers

b) Tastes of the consumers

c)Price of coffee

d) Price of tea

emeraldminnow377

Consider the following exchange economy. There are two goods, tea and coffee, and two consumers, 1 and 2. Consumer 1 has utility function:
𝑈1 (𝑡1, 𝑐1) = 14 𝑙𝑛(𝑡1) + 34 𝑙𝑛(𝑐1) where 𝑡1 and 𝑐1 are the amounts of tea and coffee (respectively) that Consumer 1consumes. Similarly, Consumer 2 has a utility function: 𝑈2 (𝑡2, 𝑐2) = 34 𝑙𝑛(𝑡2) + 14 𝑙𝑛(𝑐2) where 𝑡2 and 𝑐2 denote the amounts of tea and coffee (respectively) that Consumer 2 consumes. Consumer 1 is endowed with 12 units of tea and 32 units of coffee. Consumer 2 is endowed with 4 units of tea and 16 units of coffee. Suppose the price of coffee is normalized to 1, and let p denote the price of tea.
(a) Derive the demand functions of the two consumers for tea and coffee.
(b) Derive the competitive equilibrium price of tea in this economy and the equilibrium quantities of tea and coffee consumed by each consumer.