2. Consider a simple one-good market described by: ƏD(P) ap as(P) Q = D(P, a), <0; and Q₁ = S(P), OP where P is price, Q is quantity and a is income dp* Assume the good is normal, derive the comparative static result, da Also, what is that result in elasticity form (e.g. p.)? ->0
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- Suppose you learned that the price elasticity of demand for wheat is 0.7 between the current price for wheat and a price 2 higher per bushel. Do you think that farmers collectively would try to reduce the supply of wheat and drive the price up 2 higher per bushel? Explain your answer. Assuming that they would try to reduce supply, what problems might they have in actually doing so?Suppose the market demand curve for a product is given by Qd = 500 −50P and the market supply curve is given by Qs = −50 + 25P. a)At the market equilibrium, what is the price elasticity of demand? Hint: Find and use in place of ( and use equilibrium values of P and Q. Comment on the value of the price elasticity of demand. Suppose the price in this market is $5. What is the amount of excess demand? Suppose demand for good A is given by QDA= 500- 5PA+ 2PB+ 0.80I where PA is the price of good A,PB is the price of some other good B, and I is income. Assume that PA is currently Tk.10 PB is currently Tk.5, and I is currentlyTk.200. a) What is the income elasticity of demand for good A at the current situation? Hint: Find ∂Q/∂I and use in place of (∆Q/∆I). Comment on the value of the income elasticity.Consider the following demand and supply relationships in the market forgolf balls: Qd = 90 - 2P - 2T and Qs = -9 + 5P - 2.5R, where T is the price oftitanium, a metal used to make golf clubs, and R is the price of rubber.a. If R = 2 and T = 10, calculate the equilibrium price and quantity of golfballs.b. At the equilibrium values, calculate the price elasticity of demand and theprice elasticity of supply.c. At the equilibrium values, calculate the cross-price elasticity of demand forgolf balls with respect to the price of titanium. What does the sign of this elasticity tell you about whether golf balls and titanium are substitutes orcomplements?
- Consider the following demand and supply relationships in the market forgolf balls: Qd = 90 - 2P - 2T and Qs = -9 + 5P - 2.5R, where T is the price oftitanium, a metal used to make golf clubs, and R is the price of rubber.a. If R = 2 and T = 10, calculate the equilibrium price and quantity of golfballs.b. At the equilibrium values, calculate the price elasticity of demand and theprice elasticity of supply.No written by hand solution Suppose that the market for video games is competitive with demand function Qd = 170 – 4p + 2Y + 3pm – 2pc, where Qd is the quantity demanded, p is the market price, Y is the monthly budget that an average consumer has available for entertainment, pm is the average price of a movie, and pc is the price of a controller that is required to play these games. Given that Y = $100, pm = $30 and pc = $30, use Excel to calculate quantity demanded for p = $10 to p = $80 in $5 increments. Using Excel’s spreadsheet Find Qd = ________ when P=$30. Find Qd = ________ when P=$45. Now, Y increases to $120. Re-calculate the demand schedule and find Qd = ________ when P=$20. Let Y = $100 again, but pm increases to $40. Re-calculate the demand schedule and find Qd = ________ when P=$25. Let Y = $100, pm = $30, and pc increases to $40. Re-calculate the demand schedule and find Qd = ________ when P=$50.Suppose that the market demand and supply curves for doughnuts (good X) are given by QD = 50 – 40P + 0.03I + 10PY and QS = -150 + 60P – 10W, where P is price of X, I is the average consumer income, PY is the price of cinnamon pretzels (good Y), and W is the wage for workers producing good X. What is the Income elasticity of demand at the market equilibrium? Are doughnuts a normal good or inferior good? Suppose that I = $5,000 and PY = $5. What is the demand curve for good X? Suppose that W = $10 (per hour). What is the supply curve for good X? DO NUMBER 1 !!!!!
- Demand for cookies is of the following form: P=20-4QD, where QD is millions of cookies demanded per year and P is price in US dollars. Supply of cookies of the following form: P=6+Qs, where QS is millions of cookies supplied per year and P is price in US dollars. a. What is the equilibrium quantity of cookies traded? Solve the equation, showing your work. b. Graph the supply and demand curves, marking their intersection. Be sure to label intercepts, equilibrium, etc. c. The government imposes a tax of $2 per cookie on producers of cookies. What is the new equilibrium quantity of cookies traded? Solve the equation, showing your work. d. In a graph, show how the supply curve has shifted. What price do consumers now pay? After paying the tax, how much to producers receive.Which factor that influences change in buying plan, other than price of good? Find [05] out market equilibrium price and quantity from the demand function: Q= 15-4p ands supply function: Q=-1+ 6p. Show it graphically10.Which of the following would cause the demand curve for brooms to shift to the right, assuming that brooms were an inferior good? A-The price of brooms increases. B-The price of a complement increases. C-The income of all consumers decreases. D-The economy strengthens because of decreased taxes. E-The production of brooms decreases because of vacuum cleaners. 11.If a firm with a supply schedule with positive units at every price leaves a market, ceteris paribus, what will happen to the market supply? A-It will shift right by that firm's output quantity at every price. B-It will shift left or decrease by that firm's output quantity at every price. C-It will not change. D-It will become more elastic. E-Insufficient data to determine.
- Suppose the generic demand function of hypothetical commodity is given by Where Q* is quantity demand of commodity, Y is income, Px is price of commodity, Py is price of related good Given Y= 1500; Px = 3 and Py = 2 a). calculate price elasticity of demand and interpret the result? b). calculate income elasticity and interpret the result? c). calculate cross-price elasticity and identify the nature of the good? 2. Suppose Addis Ababa textile factory is facing the following production function with fixed supply of machineries (capital) and variable input (labor). Calculate the corresponding values of AP and MP Draw curves for TP, AP and MP of labor Identify the three stages of production and show their tabular and graphical justifications. Indicate the point where the LDMR starts to operate. The inflexion point Given Cobb-Douglas production function Q = 50 KL, if a wage rate is 25 birr per labor and the rental capital is 50 birr per capital. Determine the optimum input combinations…(Q.3.3.) Suppose the demand and supply equations for a particular good are given as follow: QD - 140 - 2P and Qs - 4P - 10. The market for this good is currently in equilibrium. (Q.3.10) At the current market price, is the market outcome efficient? If not, state the relationship between the current market price and the efficient market price, and the current quantity traded and the efficient quantity traded. At the current market price, the market outcome_______________The current market price__________________the efficlent price, and the current quantity traded___________the efficient quantity. (Please explain the response. Do not simply provide an answer. Thank you. Option choices are: is efficient, is equal to, is greater than, is inefficient, or is less than than.)Suppose that the annual demand and supply curves for some good in a competitive market are QD = 26 – 2P and QS = −2 + 2P a: Solve for the equilibrium quantity and price.b: Neatly graph this market, showing the horizontal and vertical intercepts of the demand curve,the vertical intercept of the supply curve, and the equilibrium. Make sure to put quantity on the horizontalaxis.
