Assume a market for a normal good is currently in equilibrium. If the expected price of the good is lower than the current price, then: Demand will (decrease / increase / not change): Blank 1 Supply will (decrease / increase / not change): Blank 2 Equilibrium price will (decrease / increase / not change): Blank 3 Equilibrium quantity will (decrease / increase / not change): Blank 4
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- The demand for pancakes is given by Qd = 40 – 5P and the supply is given byQs = 10P – 20, where P = price What is the equilibrium price and equilibriumquantity? i. The price for iPhones in Barbados has increased significantly. Demand for thecellular device has also increased. This is contrary to the law of demand. Doyou agree or disagree? Explain your answer. ii. Identify the flaw in this analysis: “If more Jamaicans become vegetarians, thedemand for beef will fall. The decrease in the demand for beef will cause theprice of beef to fall. The lower price, however, will then increase the demand.In the new equilibrium, Jamaicans might end up consuming more beef thanthey did initially.”Assume that you are able to determine that the equilibrium price for a good will definitely decrease, and the equilibrium quantity will definitely increase. Which of the following MUST have occurred for you to be able to make these conclusions?a. Demand decreased and supply decreasedb. Demand increased.c. Demand decreased and supply increased.d. Demand increased and supply decreased.e. Supply increased. When demand and supply both change in the same direction (for example, they both decrease), the change in the equilibrium quantity can be predicted with certainty.a. Trueb. False Consider the market for wood flooring. The economic downturn has caused many firms selling wood flooring to go out of business. At the same time, consumers are expressing a preference for wood flooring over alternatives like carpet and tile. Based on this information, what would you expect to happen to the price of wood flooring?a. The price will definitely stay the same.b. More information is needed to…Assume that supply for cars increases for any given price and, at the same time, the demand for cars reduces for any given price. You can predict: a. That the price of cars will unambiguously increase, while the car sales may increase or decrease. b. That car sales will unambiguously decrease, while the car price may increase or decrease. c. That the price of cars will unambiguously decrease, while the car sales may increase or decrease. d. That car sales will unambiguously increase, while the car price may increase or decrease.
- Q2. a. What is the law of demand? Give two examples of how you have observed the law of demand at work in the “real world.” How is the law of demand related to the demand curve?b. What variables influence the demand for a normal good? Explain why a reduction in the price of a normal good does not increase the demand for that good.Q4. What is econometric forecasting? If econometrics forecasting is considered the bestforecasting technique, what usefulness remains over other forecasting techniquesQ.3 a) A change in consumer’s expectations causes a movement along the demand curve or a shift in the demand curve? Explain. A change in price of the goods results in a movement along the demand curve or a shift in the demand curve? Explain b) A demand schedule for a normal good is as follows: Price Quantity demanded Rs.230 70 210 90 190 110 170 130 i) Do you think that the increase in quantity demanded (say, from 90 to 110 in the table) when price decreases (from Rs.210 toRs.190) is due to a rise in consumers’ income? Explain clearly (and briefly) why or why not. ii) Now suppose that the good is an inferior good. Would the demand schedule still be valid for an inferior good?In the bread market, Maria buys different amounts of bread conditional on whether the price is $2, $5, or $7 a loaf. To generate Maria’s demand curve for bread, what other set of information do we need? Group of answer choices: whether her bread consumption goes up or down with price how much bread she buys in total how much bread she buys at each price point whether or not she switches to a substitute when the price is high
- An analyst for a major apparel company estimates that the demand for its raincoats is given by ln Qdx = 10 − 1.2 ln Px + 3 ln R − 2 ln Ay where R denotes the daily amount of rainfall and Ay represents the level of advertising on good Y. What would be the impact on demand of a 10 percent increase in the daily amount of rainfall? What would be the impact of a 10 percent reduction in the amount of advertising directed toward good Y? Can you think of a good that might be good Y in this example?The international data has forecast that sales of PCs and tablets will be down significantly in 2022 and will continue to decline in 2023,leading to heavy discounts for consumers. The above expectations will have which ceteris paribus effect on the market for PCs and tablets? A. The equilibrium price will decrease B.the supply curve will shift outwards C. The demand curve will shift outwards D. The equilibrium price will increaseIn a certain market, the demand for peach was given as QD = 400 -3P, the first day of marketing in 2020, in August 2020, the demand for peach is now given as QD = 200 -3P. a)From the statement above tell in one sentence the change in demand; considered the indicator? b)What factors are responsible for the change in demand. Support your answers by sketching the equations above on the same graph.
- Suppose there are 100 consumers with identical individual demand curves. When the price ofa movie ticket is $8, the quantity demanded for each person is 5. When the price is $4, thequantity demanded for each person is 9. Assuming the law of demand holds, which of thefollowing choices is the most likely quantity demanded in the market when the price is $6? Group of answer choices 700 1,000 1,200 400Darwin consumes cigarettes (x1) and other goods (x2). His preferences are given by UD(q1,q2)=4lnq1 +q2The quantity of good 2 is measured in units of income and so you can assume that throughout this problem, the price of good 2 is normalized p2 = 1 (a) Using the Lagrangian, derive Darwin’s uncompensated demand for cigarettes: D1D(p1,Y). Note that we are holding p2 =1 and so that is not a variable in the demand function. Using the Lagrangian, derive the equation λ∗(p1, Y ). Provide an economic interpretation of the Lagrange multiplier. Does it vary with income, Y ?If buyers' preferences change so that they are willing to buy more widgets at each hypothetical price, the of/for widgets will demand, decrease supply, increase supply, decrease. demand, increase.