Consider the following market demand and market supply: Demand: p = 90-q Supply: p = 20+3q Suppose consumers fail to recognize external benefits of $20, what is the efficient equilibrium quantity (qeff)?
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- Explain the difference between complement goods and subsitute goods and give an example of substitutes and complementsThe demand and supply of two goods are given below. Good 1 demand: 100-2P1+2P2 Good 1 supply: 2P1 Good 2 demand: 200-4P2+2P1 Good 2 supply: 20+2P2 Based on the two demand equations, we can say that the goods are a. unrelated b. substitutes c. complements These two markets are in equilibrium when P1=$_________ and P2=$___________ (Enter your response rounded two decimal places.) If the demand for good 1 decreases by 20, both prices will change even though only the demand for 1 good initially changes. The new general equilibrium prices will be P1=$_________ and P2=$___________. (Enter your responses rounded two decimal places.)Assume the market for gruel again, which recall is an inferior good. Suppose consumer income decreases once again, but now, at the same time, the number of sellers of gruel is also decreasing. Now, the equilibrium price of gruel ____ and the equilibrium quantity____. a. increases; decreases b.increases; is indeterminate c.increases; increases d. is indeterminate; decreases e. is indeterminate; increases (d. Is not the correct answer)
- explain how determinats of demand affect household demand decisions and market demand.Fatima perceives tea (vertical axis) and coffee (horizontal axis) as perfect substitutes, where she is always willing to exchange 2 cups of tea with 1 cup of coffee. Assume that her income is $200 and the prices of tea and coffee are $4 and $5 per unit respectively. Clearly label your graph, showing the quantities of tea and coffee consumedDraw the market equilibrium and show the shift in equilibrium point under below mentioned situations along with direction. When the price of a substitute good increases. When the price of a complement good increases. When there is an increase in the income of consumers. When the cost of production increases. When due to change in technology, cost of production decreases. When both demand and supply increases. When both demand and supply decreases. When demand increases and supply decreases. When demand decreases and supply increases.
- Suppose that the demand curves for goods A, B, and C have the following functional forms:, where Q denotes quantity demanded and P denotes price: QA = 120 - 3.5 PA + 6PB QB = 100 - 2PB + 3PC QC = 1500 - 0.5PC - 2PA. Based on these demand curves, which of the following pairs of goods are known to be substitutes? Based on these demand curves, which of the following pairs of goods are known to be Complements?Equilibrium is achieved when quantity demanded intersect with quantity supplied. Assume aproduct “Mobile Phone” for which supply and demand shifts. You are required to prepare graphs of each situation given below?a. Increase in income: Mobile Phone is a normal good.b. Increase in income: Mobile Phone is an inferior good.c. Decrease in the price of a substitute for Mobile Phone.d. Decrease in the price of a complement for Mobile Phone.e. Increase in the cost of production of Mobile Phone.f. Decrease in the cost of production of Mobile Phone.The figure below shows Sue's and Carlos' demand curves for gasoline. It would be useful to find the equation of the demand curves to answer the questions below. Refer to the figure above. The total demand curve has the vertical intercept at ________ and the horizontal intercept at ________, and its slope ________. (Multiple Choice) A)10.00 euros; 7,000 liters; is half as steep as Carlos's demand curve B) 15.00 euros; 7,000 liters; changes at 10.00 euros C) 15.00 euros; 7,000 liters; changes at 8.12 euros D) 18.00 euros; 7,000 liters; is twice as steep as Sue's demand curve
- In consumer theory economics, what is the difference between a necessity and a luxury good. What is the likely difference in the tax revenue obtained from a tax imposed on a necessity versus a luxury good? Explain and illustrate with appropriate figures.Is the statement true or false? When a demand curve is a downward sloping straight line, the slope of the marginalrevenue curve is twice as steep as the demand curve.Suppose there are three (3) people in a market for bottles of perfume; Mutumbu, Jasanu and Julius The individual demand for perfumes for each of these consumers is given as 10 bottles for Mutumbu, 15 bottles for Jasanu and 25 bottles for Julius at $60 per bottle for perfume. Thus, the market demand for perfumes if the market price is $60 is. (a)40 bottles (b)60 bottles (c)80 bottles (d) None of theb above