is discrimination against them in other areas of the city. Rents paid are a very high percent of peoples’ incomes. (a) Would the demand for apartments in this area be relatively inelastic or relatively elastic? State why. (b) Would the supply of apartments in this area be relatively inelastic or relatively elastic? State why. 1 (c) Draw the demand and supply curves as you have described them, showing the initial equilibrium price and quantity. Label carefully. (d) Now assume the government creates…

Supplement to Unit - II BEHIND THE DEMAND CURVE: THE THEORY OF CONSUMER CHOICE Here, the purpose is to explain the derivation of the demand function and to provide an understanding of the consumer decision-making process. Consumer Preferences Individuals make choices based on their personal tastes and preferences. Tastes and preferences are shaped by many factors. Some of the factors are family environment, physical condition, age, sex, education, religion, and location. In the analysis that…

effect on the demand curve Markets in Action Advertising and its effect on the demand curve Advertisement has always been an important market strategy for firms to accomplish their goals. From cereal companies to airline companies, it is inevitable to go through the process of advertising. However, what purpose does advertising serve for consumers and suppliers in the market? In this report, it is to examine the relationship between advertising and the market demand curve. Moreover, the…

If we draw a Demand-Supply curve, the point where the demand curve and the supply curve meet is the market equilibrium which is the price at which quantity supplied equals quantity demanded. In this question, the equilibrium price is $20 and equilibrium quantity is 3, here at equilibrium price, the number of sellers and number of buyers are same which is 3, so there is no pressure for price to change. But if it is $24, the quantity demanded is less than the quantity supplied so there will be excess…

dividend of $40 for the current year, what is the approximate present value of this stock, given at discount rate of 5% and a dividend growth rate of 3%? Answer: P = $40/(0.05 - 0.03) = $40/0.02 = $2,000 Topic 2: Supply and Demand 1) Suppose that the demand for oranges increase. Explain the long -run effects of the guiding function of price in this scenario. Answer: In the long run, the higher price of oranges will signal more firms to enter the orange market, as it will seem…

1. Suppose there are 100 consumers with identical individual demand curves. When the price of a movie ticket is $8, the quantity demanded for each person is 5. When the price is $4, the quantity demanded for each person is 9. Assuming the law of demand holds, which of the following choices is the most likely quantity demanded in the market when the price is $6? Explain and show calculations, While the question asks of the choices given what the quantity demanded will be, there are no choices…

1. The aggregate demand curve shows the relationship between the aggregate price level and (the) aggregate: productivity. unemployment rate. quantity of output demanded by households, businesses, the government, and the rest of the world. quantity of output demanded by businesses only. 2. The aggregate demand curve slopes: downward in part because as the price level falls, the ability of households and firms to borrow cheaply increases. downward in part because when the price level…

Plotting this gives us Total Cost, Total Variable Cost, and Total Fixed Cost. Given that total fixed costs (TFC) are constant as output increases, the curve is a horizontal line on the cost graph. The total variable cost (TVC) curve slopes up at an accelerating rate, reflecting the law of diminishing marginal returns. The total cost (TC) curve is found by adding total fixed and total variable costs. Its position reflects the amount of fixed costs, and its gradient reflects variable costs. But…

there is a gap between supply and demand. This is demonstrated by two curves which are the demand curve and the supply curve. Consumers of a product are encouraged to increase purchasing when the government decreases prices and as price rises to decrease purchasing, whereas, suppliers are encouraged to increase production when prices are high and decrease production when prices fall. The market model shows that at one point the demand curve and the supply curve intersect. This is called the equilibrium…

oligopoly in which the manner of the corporation or industry is quite familiar to that of a monopoly. This oligopoly is termed collusive. A collusive oligopoly has the ability to behave in the manner of a monopoly and no longer faces a kink in the demand curve. With this type of oligopoly there comes many obstacles. A few examples of obstacles that need to be overcome are that of the Trade Practices Act, which states that any unfair or deceptive trade by a business is illegal, and also difficulty in…