1. Describe the probable shifts in the demand curves for Airplane trips when airlines’ on-time performance improves Automobiles when airplane fares increase Automobiles when gasoline prices increase

1. Describe the probable shifts in the demand curves for Airplane trips when airlines’ on-time performance improves Automobiles when airplane fares increase Automobiles when gasoline prices increase

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter6: Demand And Elasticity

Section: Chapter Questions

Problem 2TY

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4) An economic consultant for MCM corporation recently provided the firm’s marketing manager with this estimate of the demand function for the firm’s product: Qxd = 12,000 − 3Px + 4Py − 1M + 2Ax where Qxd represents the amount consumed of good X, Px is the price of good X, Py is the price of good Y, M is income, and Ax represents the amount of advertising spent on good X. Suppose good X sells for K200 per unit, good Y sells for K15 per unit, the company utilizes 2,000 units of advertising, and consumer income is K10,000. 4 (i) How much of good X do consumers purchase? 4 (ii) Are goods X and Y substitutes or complements? 4 (iii) Is good X a normal or an inferior good?
Suppose there are three types of Apples A, B and C being sold and consumed. The demand and supply equations for each type are: DA = − PA + PB + PC 20 2 4 S A = 4PA − 5DB PA PB PC = 10 + 3 − 5 + 2 SB = 3PB − 7DC PA PB PC = 70 + 4 + 2 − 5 = 5 − 16 SC PC• Determine equilibrium prices and quantities using Cramer’s rule. • Calculate the elasticity of demand for B with respect to prices of variety A, B and C and interpret the economic meaning of the results.
Suppose there are three types of Apples A, B, and C being sold and consumed. The demand and supply equations for each type are: DA = 20-2PA+4PB+PC SA = 4PA-5 DB = 10+3PA-5PB+2PC SB = 3PB-7 DC = 70+4PA+2PB-5PC SC = 5PC-16 Determine equilibrium prices and quantities using Cramer's rule. Calculate the elasticity of demand for B with respect to prices of variety A, B, and C and interpret the economic meaning of the results.
Price Quantity Supplied (packs) Quantity demanded (packs) K80 100 500 K90 150 450 Price Quantity Supplied (packs) Quantity demanded (packs) K100 250 400 K110 350 350 k120 450 300 Use graph to show equilibrium and equations, find elasticities at ranges k90 to k100 and over the range k110 and k120 Recalculate elasticities when 20 more more bags were demanded over the same ranges as a result of an increase in income Use graphs to illustrate the shifts to the right in demand resulting from the 20bags increases in quanties demanded Briefly explain how the demand for soya beans in Zambia is affected by the following: The soya beans Association in Zambia increases the soya beans prices effective the following week The buyers prefer corn beans to soya beans Increase in income for soya beans consumers…
13. If a change of 15% in price of good X, results in a change in demand for good Y of 5%,then:(a) The cross-price elasticity of demand is 1/3 and the goods are substitutes(b) The cross-price elasticity of demand is 3 and the goods are substitutes(c) The cross-price elasticity of demand is 1/3 and the goods are complements(d) The cross-price elasticity of demand is 3 and the goods are complements(e) None of the above is true
The demand for haddock has been estimated aslog Q = a + b log P + c log I + d log Pmwhere Q = quantity of haddock sold in New EnglandP = price per pound of haddockI = a measure of personal income in the New England regionPm = an index of the price of meat and poultryIf b = -2.174, c = 0.461, and d = 1.909,a. Determine the price elasticity of demand.b. Determine the income elasticity of demand.c. Determine the cross price elasticity of demand.d. How would you characterize the demand for haddock?e. Suppose disposable income is expected to increase by 5 percent next year.Assuming all other factors remain constant, forecast the percentage change in the quantity of haddock demanded next year.
If you had been hired to advise your local public transit authority on how they could raise transitrevenues and you knew the elasticity of demand for transit rides, you would be able to give a goodanswer.Explain why above statements is True, False, or Uncertain according to economic principles. Use diagrams where appropriate.
Suppose there are three apples A,B and C being sold and consumed. The demand and supply equations for each type are: DA=20-2PA+4PB+PC , SA=4PA-5 DB=10+3PA-5PB+2PC , SB= 3PB-7 DC=70+4PA+2PB-5PC , SC=5PC-16 a) determine equilibrium Prices and quantities using Cramer's rule. b) calculate the elasticity of demand for B with respect to Prices of variety A,B and C and interpret the economic meaning of the results
The Gulf Sea Turtle Conservation Group (GSTCG), a non–profit group of volunteers working to collect data on nesting sea turtles and to promote sea turtle conservation, is considering creating a video to educate people about sea turtle conservation. The cost of duplicating a video on a DVD and mailing the DVD is $5.56. In a GSTCG member meeting, the video plan was discussed. The first two columns of Table 1 below shows the expected demand for the DVD at different suggested donation levels, and they can act as a single-price monopolist if they choose to. The receipts will be used to fund GSTCG supplies for their data collection and conservation work. At the end of each sea turtle nesting season, any excess funds are donated by the GSTCG to a local non-profit sea turtle research and rehabilitation facility. Complete Table 1 by computing the Total Revenue, Marginal Revenue, Total Cost, and Profit columns, each rounded to two decimal places. The cost of duplicating a video on a DVD and…
2. Suppose your marketing research department estimates the demand for your company’s product as Qx= 500-11Px+0.5Y, where Qx is the quantity demanded per week, Px is the price of product X, and Y is the average household income per week in the city. R2=0.87, the standard error of the coefficients of the price (Px) and household weekly income (Y) are 2 and 0.1, respectively. a. Are the coefficients of Px and Y statistically significant? b. Given the initial values Px=$10 and Y=$1000, find price elasticity (Ep) and income elasticity(EY), respectively. Is the demand for the company’s product price and income elastic, or inelastic? c. What action should the manager take to increase the company’s operating revenue? d. Is the company’s product a normal good? How do you know? e. Interpret what R2=0.87 means
The demand for hamburgers is given by Qd=10-p and the supply is Qs=4p-10, where pd and ps are, respectively the price paid by demanders and the price received by suppliers. A: Draw the demand and supply functions. What is the price-elasticity of demand? What is the price-elasticity of supply? B: Find the equilibrium quantity and price, and show them on the graph. C: Suppose due to the rising health awareness the demand decreases to Q d=5-p. Find the new equilibrium prices and quantity, and show them on the graph. D: Suppose that the demand and supply are as before, i.e. Qd=10-p and Qs=4p-10, but now the government imposes a quantity tax on the suppler at the rate of 1 per unit of the quantity. What quantity will be sold and what price? E: In part d), what is the total amount of tax collected by the government? How this tax amount is divided between the demanders and supplier? Who pays more and why? Explain
2. The demand for good X is given by:d= 6,000 - 0.5Px - Py +9Pz + 0.1MQxResearch shows that the prices of related goods are given by Py = $6,500 and Pz = $100, while theaverage income of individuals consuming this product is M = $70,000. a. How many units of good X will be purchased when Px = $5,230? b. Determine the demand function and inverse demand function for good X. Graph the demand curve forgood X.