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- Supply and Demand Changes (be sure to label the axis on all of your graphs)a)b)c) d)e)f) g)• • • •Suppose that you do a national survey of Americans, asking them how they feel about American- made cars versus Japanese-made cars. Suppose as well that you discover that Americans’ “taste” for American-made cars has decreased and the taste for Japanese- made cars has increased. Using the demand and supply model, show how this change in taste for American-made cars will impact the market for American-made cars. Give your predictions for the change in the equilibrium price and the equilibrium quantity of American-made cars bought and sold.Suppose that you have information indicating that the price of steel (an important input of production in the auto industry) has doubled during the past few months. Show how this economic shock will influence the market for American made cars and give your predictions for equilibrium price and sales change.Suppose both (a and b above) of these shocks are…I. For the normal good, make a (Hypothetical) linear demand schedule with 7 different price points and corresponding quantity demanded for your own household. For the same normal good, make another (Hypothetical) linear demand schedule with 7 different price points and corresponding quantity demanded for your neighbor. Assuming that you and your neighbor are the only two households in the market, make a market demand schedule for the same normal good. Draw and interpret a graph to show the market demand and impact of changes in quantity demanded, if price of the same normal good decreases.Now, imagine that instead of the subsidy the UK government had responded to the cost-of-living crisis by subsidising both energy and food demand through a subsidy to producers resulting in a reduction of both energy prices and food prices by 10%. Using the same indifference curve of point a., what is the optimal level of consumption of energy following such intervention? How much of the change in quantity of each good consumed is due to an income effect and how much to a substitution effect? please could you answer this showing a diagram of the indifference curve movement. could you do food on the y axis and energy on the x axis.
- 1. Assume you spend your entire income on two goods X & Y with prices given as PX & PY, respectively. Prices and income (I) are exogenous and positive. Given that U = X2 + Y2 , derive the Marshallian demand function for good Y and evaluate the type of good. 2. Assume you spend your entire income on two goods X & Y with prices given as PX & PY, respectively. Prices and income (I) are exogenous and positive. Given that U= X2Y2 , derive the Hicksian demand function for good Y.3. Suppose that initially PX = 2, PY = 8, I = 96 and the Marshallian demand function for good Y is given by Y∗ = (0.5I/ PY)+(0.5PX/PY)− 0.5. Calculate the own price & income elasticities of demand for good Y. Interpret your computed values and say something about the type of good.4. Suppose the economy has 100 units each of goods X and Y and the utility functions of the (only) 2 individuals are: UA (XA,YA) = X0.25Y0.75, UB (XB,YB) = X0.75Y 0.25Show that pareto-improvement is possible if,…Zara 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 thather 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 consumed.There are only two people in the market - Amber and Zoe. Amber’s Marginal Willingness to Pay (MWTP) for the Qth bit of the good is given by MWTP=383-2*Q. Zoe’s Marginal Willingness to Pay (MWTP) for the Qth bit of the good is given by MWTP=51-3*Q. Based on this information, what is the market MWTP for the 32th bit of the good? Enter a number only.
- Lucas chooses between water and all other goods. If he spends all his money on water, he can buy 15 thousand gallons per week. At current prices, his optimal bundle is e1, where he buys both types of goods. Show e1 in a diagram. During a drought, the government limits the number of gallons per week that he may purchase to 10 thousand. Using diagrams, discuss under which conditions his new optimal bundle, e2, will be the same as e1. If the two bundles differ, can you state where e2 must be located relative to e1?I. Supply and Demand Changes (be sure to label the axis on all of your graphs)a)b)c) d)e)f) g)• • • •Suppose that you do a national survey of Americans, asking them how they feel about American- made cars versus Japanese-made cars. Suppose as well that you discover that Americans’ “taste” for American-made cars has decreased and the taste for Japanese- made cars has increased. Using the demand and supply model, show how this change in taste for American-made cars will impact the market for American-made cars. Give your predictions for the change in the equilibrium price and the equilibrium quantity of American-made cars bought and sold.Suppose that you have information indicating that the price of steel (an important input of production in the auto industry) has doubled during the past few months. Show how this economic shock will influence the market for American made cars and give your predictions for equilibrium price and sales change.Suppose both (a and b above) of these shocks are…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
- This problem involves solving demand and supply equations together to determine price and quantity. a. Consider a demand curve of the form QD=-2P+20, where QD is the quantity demanded of a good and P is the price of the good. Graph this demand curve. Also draw a graph of the supply curve Qs =2P-4, where Qs is the quantity supplied. Be sure to put P on the vertical axis and Q on the horizontal axis. Assume that all the Qs and Ps are nonnegative for parts a, b, and c. At what values of P and Q do these curves intersect-that is, where does QD = Qs ? b. Now, suppose at each price that individuals demand four more units of output-that the demand curve shifts to QD - 2P+24. Graph this new demand curve. At what values of P and Q does the new demand curve intersect the old supply curve-that is, where does QD = Qs ? c. Now finally, suppose the supply curve shifts to Q's=2P-8. Graph this new supply curve. At what values of P and Q does QD=Q's? Show all working calculations and label garph with…The demand for bacon is given by Q d=70-3p and the supply is Q s=2p-30. (a). Draw the demand and supply functions. Find the equilibrium quantity and price, and show them on the graph. (b). Suppose due to increased health awareness the demand changes to 50-3p. The supply remains the same. Draw the new demand function on the same graph, and find the new equilibrium price and quantity. Has the demand increased or decreased? How did the equilibrium price and quantity change compared to part a.?Earlier this year, 2021, the price of chicken meat rose unexpectedly reached to 250/ kilo at peak from the previous price of 170/ kilo. This 68% increase of price per kilo was primarily caused by excess demand for chicken meat. This is the result of the decrease in consumption for pork meat due to the threat of African Swine Flu (ASF). However, even though consumer shifted preferences, the increase in the price of chicken was perceived to be too high for the budget of consumers. Therefore, sellers realized decrease in their daily aggregate sales from 1,000 kilos to 700 kilos. 1. Illustrate the change in the market equilibrium through a graph. 2. What presumably happened to the total revenues of the sellers during the price hike period? a.) Compute the price elasticity of demand b.) Derive the total revenue before the hike (TR1), and after the hike (TR2).
