(A) Methamphetamine is a highly addictive drug, hence there is a high necessity associated with it, which would mean that for users of the drug, demand would be inelastic. P is a reputed necessity, because it is a good which isn’t essential for survival, but many users simply think they have to have it. Because those who use P generally have a strong addiction and dependence to P, an increase in price, caused by reduced supply from increased seizures of precursors used in the manufacture of the drug, such as pseudoephedrine, would most likely result in a less than proportional change in quantity demanded. Despite this, not all users of P are completely addicted, and a price increase would cause some users to reduce quantity demanded. It …show more content…
as the price increases, there is a less than proportionate response to change to quantity demanded, and hence equilibrium quantity. (D) In reducing the quantity of pseudoephedrine coming into New Zealand, Customs and the Police are reducing the potential production of P. in effect, officials are increasing the scarcity of P in NZ, although this may seem positive, it may encourage producers of P to increase quantity supplied. This is because the recently increased scarcity causes producers to reduce supply, causing a leftwards shift of the supply curve, hence the equilibrium price increases (as shown on diagram 1). This is due to the inelastic nature of price for demand of P, as well as the elastic nature of price for supply of P. It is this price elasticity for supply of P that results in the producers of P increasing quantity supplied by a greater proportion than the change in price. The perverse incentive for producers of P in this case would be increased equilibrium price, which, according to the law of supply and the supply price elasticity associated with P, would cause producers to increase supply. (E) Demand side methods used to combat the use of trade of P in NZ would be more effective than supply-side methods. As shown in diagram 2, demand-side effects used by officials to control P result in greater decreases in the equilibrium quantity, than compared to diagram 1, where supply-side methods are used to control P. In this
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?
However, if the school allows a competing student the right to sell ice cream on school property, it could change the price of ice cream. The price of ice cream is lowered due to technology. The invention of better ice cream machines or an idea to make better use of counter space can lower a firm’s cost and raise the quantity of ice cream it supplies. Prices could also be increased due to input prices. Less ice cream is supplied when workers need be paid more, therefore ice cream machines cost more, or even ingredients like
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4) For each article describe causes of changed price and the effects of the changed price.
Using the data and your own economic knowledge, assess the case for financing universities mainly through charging fees to their students.
1. All firms, no matter what type of firm structure they are producing in, make their production decisions based on where:
Law of Demand: Downward slope, and inverse relation of price and quantity demand. When price of oranges goes up, the quantity demand will decrease, because of higher price, and substitutes.
What is the effect on the equilibrium price and equilibrium quantity of orange juice if the price of apple juice decreases and the wage rate paid to orange grove workers increases?
This causes the price and the quantity move in opposite directions in a supply curve shift. Also, if the quantity supplied decreases at any given price the opposite will happen.
Your paper should be between 1750 and 2500 words, in APA format and structured as follows:
In this way, the Fed manages price inflation in the economy. So bonds affect the U.S. economy by determining interest rates. This affects the amount of liquidity. This determines how easy or difficult it is to buy things on credit, take out loans for cars, houses or education, and expand businesses. In other words, bonds affect everything in the economy. Treasury bonds impact the economy by providing extra spending money for the government and consumers. This is because Treasury bonds are essentially a loan to the government that is usually purchased by domestic consumers. However, for a variety of reasons, foreign governments have been purchasing a larger percentage of Treasury bonds, in effect providing the U.S. government with a loan. This allows the government to spend more, which stimulates the economy. Treasury bonds also help the consumer. When there is a great demand for bonds, it lowers the interest rate.
1) According to the Law of Demand, the demand curve for a good will A) shift leftward when the price of the good increases. B) shift rightward when the price of the good increases. C) slope downward. D) slope upward. Answer: C 2) An increase in the price of pork will lead to A) a movement up along the demand curve. B) a movement down along the demand curve. C) a rightward shift of the demand curve. D) a leftward shift of the demand curve. Answer: A 3) An increase in consumer incomes will lead to A) a rightward shift of the demand curve for plasma TVs. B) a movement upward along the demand curve for plasma TVs. C) a rightward shift of the supply curve for plasma TVs. D) no change of the demand curve for plasma TVs. Answer:
1. Give an example of an opportunity cost that an accountant might not count as a cost. Why would the accountant ignore this cost?
This graph shows a price ceiling. P^e shows the legal price the government has set, but P^f shows the price the marginal consumer is willing to pay at Q^s, which is the quantity that the industry is willing to supply. Since P^f > P^e (MC), a deadweight welfare loss results. P^e and Q^e show the equilibrium price. At P^c the quantity demanded is greater than the quantity supplied. This is what causes the shortage.
In the United States, minimum wage has remained at a low number for several years. Minimum wage is defined as the lowest possible income that an employer can legally pay an employee. This ensures that all people are fairly paid and not defrauded by companies or businesses. Minimum wage is considered a price floor and the minimum wage laws determine the lowest price possible that any employer must pay for labor. In an economic model, the quantity of supplied is greater than the quantity demanded and the minimum wage is above equilibrium price and quantity. Minimum wage prevents labor supplied and labor demanded from moving