Solving Simple Equations
These next two problems are a little harder. See if you can do them. Remember to apply the order of operations: simplify inside parentheses first; then multiply and divide left to right; finally add and subtract left to right.
Suppose you have determined that the quantity demanded of eggs depends on their price and the income of consumers. Prior to quantifying these relationships using a mathematical model you want to be sure of their directional relationships. Which statement is likely to be true?
- The sale of eggs falls when prices rise and falls when income rises
- The sale of eggs falls when prices rise but increase when consumer income rises.
- The sale of eggs rises when the price rises but falls when income falls.