Before the virus hits, the Good A market is on D1 and S1. The market price is P1. Suppose the income elasticity of Good A is -5. When the virus initially hits, the demand for Good A will [Select ] When Henry starts getting his enhanced plus regular unemployment benefits, the demand for Good A will (Select] Comparing his income when the virus initially hit (and he was receiving no unemployment benefits) to after he starts receiving normal and enhanced unemployment benefits, his income has ( Select ] Given the income elasticity this means demand after Henry starts receiving normal and enhanced unemployment benefits, will shift ( Select ] Income/Conumption Market (Good A) Price Henry D. $1000 S800 IC, S200 (B) Leisure

Before the virus hits, the Good A market is on D1 and S1. The market price is P1. Suppose the income elasticity of Good A is -5. When the virus initially hits, the demand for Good A will [Select ] When Henry starts getting his enhanced plus regular unemployment benefits, the demand for Good A will (Select] Comparing his income when the virus initially hit (and he was receiving no unemployment benefits) to after he starts receiving normal and enhanced unemployment benefits, his income has ( Select ] Given the income elasticity this means demand after Henry starts receiving normal and enhanced unemployment benefits, will shift ( Select ] Income/Conumption Market (Good A) Price Henry D. $1000 S800 IC, S200 (B) Leisure

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter5: Income And Substitution Effects

Section: Chapter Questions

Problem 5.9P

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Can you please answer these questions? I recommend the typed question is answered over the picture senario 1, if you can only do one.Due to good weather, there is an increase in the demand for the good. The new demand equation is Qd = 190 – 2P. The government is trying to decide between two options: Maintain the number of quotas and let the market adjust, orMaintain the price support and increase the number of quotas. Suppose that the government decides to maintain the number of quotas and let the market adjust. Calculate:ii) the consumer surplusiii) the producer surplusiv) dead weight loss HINT: Sketch the supply and demand equations. Which of the two options would be preferred by the producers? Which of the two options would be preferred by society as a whole?
According to studies undertaken by the U.S. department of agriculture, the price elasticity of demand for cigarettes is between -0.3 and -0.4. Suppose congress, influenced by studies linking cigarette smoking to cancer plans to raise the excise tax in cigarettes so the price rises by 10 percent. The expected effect the price increase will have on cigarette consumption is?
Scenario 5-3The supply of aged cheddar cheese is inelastic, and the supply of bread is elastic. Both goods are considered to be normal goods by a majority of consumers. Suppose that a large income tax increase decreases the demand for both goods by 10%. Refer to Scenario 5-3. Total consumer spending on aged cheddar cheese will a. increase, and total consumer spending on bread will increase. b. increase, and total consumer spending on bread will decrease. c. decrease, and total consumer spending on bread will increase. d. decrease, and total consumer spending on bread will decrease.
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?
Suppose household annual demand for gasoline follows the equation QD = 2000 – 500P + 25I where P is the price of a gallon of gasoline and I is household income in 1000s of dollars. Suppose that P = 3 and I = 60. What quantity of gasoline will households demand at this price and income level? __________ What is the income elasticity of demand for gasoline at this price, income, and quantity level? __________ What happens to the income elasticity of gasoline demand if I rises from 60 to 100? It _____________ (rises/falls) to ______________. Does this change in elasticity make gasoline buying more or less sensitive to income changes? __________
According to studies undertaken by the U.S. department of agriculture, the price elasticity of demand for cigarettes is about +0.5. Suppose a major brokerage firm advised its clients to buy cigarette stock under the assumption that, if consumer income rise by 50 percent as expected over the next decade, cigarette sales would double. Based on the fundamental economic principles on income elasticity of demand, a reasonable reaction to this investment advice would be?
The demand for a good is QA=200+0.3I-PA+2PB, where QA is the quantity demanded of Good A, I is the individual’s income, PA is the price of Good A, and PB is the price of Good B. Which of the following statements is true? a. Good A is a normal Good. In addition, Goods A & B are substitutes. b. Good A is a normal Good. In addition, Goods A & B are complements. c. Good A is an inferior Good. In addition, Goods A & B are substitutes. d. Good A is an inferior Good. In addition, Goods A & B are complements.
Suppose a consumer views a red pencil as a perfect substitute for a blue pencil. Suppose the supply of a red pencil has a positive slope. Suppose the prices of red and blue pencils are, pr and PB. What would happen if the government taxed only red pencils. What would happen if there were only red pencils? What would happen if there were only blue pencils?
Suppose U = 2X + Y, I = 20, Px = 2, and Py = 2. (a) Find Marshallian demand for X and Y . (b) What is Marshallian demand for X and Y if the price of X increases to 5? How much of the change in demand for X is the income effect and how much is the substitution effect? (c) How much is compensating variation for the price change described in part (b)? (d) How much is equivalent variation for the price change described in part (b)? ( Please solve all the subparts ASAP I will give you thumbs up . )
Suppose that for Abraham, the income elasticity of demand for movie tickets is +0.25, and for Sarah, the income elasticity is +1.6. Based on this information we can conclude that.
The utility function of a consumer is u = √x + 2y. (a) Show mathematically that the rise of Px will decrease demand for x goods. (b) Demonstrate mathematically that an increase in Px will increase demand for goods y. (c) If currently the price of goods is four times more expensive than the price of goods x and the government wants to set a tax that results in the increase in Px′ = 1.1Px, what are the units of decrease in the number of x items requested?
Compare the impact of a recession that reduces consumer income by 10 percent on theconsumption of technology goods and house rentals. Suppose that the income elasticity ofdemand for technology goods is 3 and the income elasticity of demand for house rentals is0.3. Based on your response, make a policy argument to support through governmentfunding either businesses or house rentals.