Economic Analysis: Production Possibilities Of Motorcycles And Car

Disregard the new tax from number three. Now assume the government imposes a price ceiling of $100 in this market, as the result of protest of price gouging by sellers. What would happen to the price and quantity in this market?

“The Cross-price elasticity of demand measures the rate of response of quantity demanded of one good, due to a price change of another good” (Economics.about.com,

However, when the equilibrium price is beyond the expectation of a fair market value, for reasons of political or social concerns governments will intervene in the market and establish limits on such things as wages, apartment rents, electricity, or agricultural commodities. Government uses price ceilings and price floors to keep prices below or above market equilibrium. (Stone, 2012, page 68)

3. The price elasticity of demand increases with the length of the period considered simply because ( )

28. Holding all else constant, an increase in the price of hot dogs would cause:

d. Calculate the price elasticity of demand in each market and discuss these in relation to the prices to be charged in each market.

1.  Increased demand for a product or service will usually result in lower prices for the item.  FALSE

e.   Firms that are price makers…/a monopoly is a price maker as it holds a large amount of power over the price it charges.

Evaluate the view that, because price discrimination enables firms to make more profit, firms, but not consumers, benefit from price discrimination

v. Whether its price is above or below the average price of all companies competing in that geographic region

If the government puts in a price ceiling, then the quantity demanded will exceed the quantity supplied, meaning that not enough goods or services will be supplied to satisfy demand. This situation is called a shortage. Because price ceilings are installed in the interests of

2. The quantity of peanuts supplied increased from 40 tons per week to 60 tons per week when the price of peanuts increased from $4 per ton to
$5 per ton. The price elasticity of supply for peanuts over this price range is

II. When price falls from 4 pounds to 3 pounds the demand for travel increases to 80,000 units- At the original market price of 4 pounds the demand for travel was 60,000 units generating revenue of 240,000 pounds. When the price is reduced to 3 pounds the resulting demand is 80,000 units and this also generates income of 240,000 pounds. When market price changes and the resulting revenue remains the same it can be said that price elasticity of demand is unitary in

Motorcycles fall into the category called Recreational Vehicle, Motorcycle and Boat Retail Industry. These are companies that retail recreational vehicles, boats, motorcycles, jet skis, and/or related accessories. In Hoover’s classification, based on the North American Industry Classifications System (NAICS) and the older U.S. Standard Industrial Classification (SIC) system, motorcycles fall under a smaller subcategory called Motorcycle, ATV, and Personal Watercraft Dealers Industry. This U.S. industry comprises establishments primarily engaged in retailing new and/or used motorcycles, motor scooters, motorbikes, mopeds, off-road all-terrain vehicles, and personal watercraft, or retailing these

b) In a monopolistic competition structure, although there are numerous firms, they carry different products. Due to product differentiation, each company is able to somewhat control their own pricing.