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- 3. Problems and Applications Q3 Suppose the price elasticity of demand for heating oil is 0.1 in the short run and 0.9 in the long run. % in the short run and by If the price of heating oil rises from $1.80 to $2.20 per gallon, the quantity of heating oil demanded will fall by % in the long run. The change is in the long run because people can respond easily to the change in the price of heating oil. Grade It Now Save & Continue Continue without saving06. If demand for this product increased from D1 to D2 as a result of a decrease in price of a related product, then these two products are a) complements. b) substitutes. c) inferior goods. d) public goods. e) economic goods.Distinguish between demand and quantity demanded. Do the same for supply andquantity supplied.The difference between demand 6332.3.Describe the field of economics known as microeconomics.What is the cost-benefit principle?
- Viking InterWorks is one of many manufacturers that supplies memory products to original equipment manufacturers (OEMs) of desktop systems. The CEO recently read van article in a trade publication that reported the projected demand for desktop systems to be Qddesktop = 1,600 −2Pdesktop + .6M (in millions of units), where Pdesktop is the price of a desktop system and M is consumer income. The same article reported that the incomes of the desktop systems’ primary consumer demographic would increase 4.2 percent this year to $61,300 and that the selling price of a desktop would decrease to $980, both of which the CEO viewed favorably for Viking. In a related article, the CEO read that the upcoming year’s projected demand for 512 MB desktop memory modules is Qdmemory = 11,200 − 100Pmemory − 2Pdesktop (in thousands of units), where Pmemory is the market price for a 512 MB memory module and Pdesktop is the selling price of a desktop system. The…6. Best Buy sells Q units of áat-screen TVs each year. Best Buy executives also know that the price elasticity of demand for áat-screen TVs is eQ;P = 1:5. They propose a 20% reduction in the price of áat-screen TVs claiming that total revenue (a) will increase by 15%. (b) will increase by 30%. (c) will increase by 3:5%. (d) will decrease by 30%. (e) will increasQ22 The "paradox of value" refers to the... a. Situation where a good with a low total value commands a low price, while a good with a high total value commands a high price. b. Situation where a good with a low total value commands a high price, while a good with a high total value commands only a low price. c. Fact that goods with high total values command high prices. d. Confusion between supply curves and demand curves. e. Fact that goods with low total values command low prices.
- Case study: Government interventionThe price of raw sugar recently reached its highest level since 1981 due to problems with supply. Historically, rawsugar has traded at between 10 and 12 US cents per pound at the New York Board of Trade. But the price increased toover 18 cents last month.Growing demand in Brazil for sugar to be turned into ethanol for fuel, coupled with a sharp fall in Indian productionhave both been factors in the price increase.Sugar production in India for 2008-09 fell 45% year-on-year due to less rain in the monsoon season damaging anumber of agricultural crops.The London-based International Sugar Organisation predicts that global consumption of sugar is likely to outstripproduction by 9m tonnes next year, forcing food companies and governments to dig into stockpiles. In the US, snackproducers including Mars, Nestlé and Krispy Kreme Doughnuts put pressure on the US government to relax importcontrols, warning that otherwise they might run out of sugar.Commentators…Case study: Government interventionThe price of raw sugar recently reached its highest level since 1981 due to problems with supply. Historically, rawsugar has traded at between 10 and 12 US cents per pound at the New York Board of Trade. But the price increased toover 18 cents last month.Growing demand in Brazil for sugar to be turned into ethanol for fuel, coupled with a sharp fall in Indian productionhave both been factors in the price increase.Sugar production in India for 2008-09 fell 45% year-on-year due to less rain in the monsoon season damaging anumber of agricultural crops.The London-based International Sugar Organisation predicts that global consumption of sugar is likely to outstripproduction by 9m tonnes next year, forcing food companies and governments to dig into stockpiles. In the US, snackproducers including Mars, Nestlé and Krispy Kreme Doughnuts put pressure on the US government to relax importcontrols, warning that otherwise they might run out of sugar.Commentators…Case study: Government interventionThe price of raw sugar recently reached its highest level since 1981 due to problems with supply. Historically, rawsugar has traded at between 10 and 12 US cents per pound at the New York Board of Trade. But the price increased toover 18 cents last month.Growing demand in Brazil for sugar to be turned into ethanol for fuel, coupled with a sharp fall in Indian productionhave both been factors in the price increase.Sugar production in India for 2008-09 fell 45% year-on-year due to less rain in the monsoon season damaging anumber of agricultural crops.The London-based International Sugar Organisation predicts that global consumption of sugar is likely to outstripproduction by 9m tonnes next year, forcing food companies and governments to dig into stockpiles. In the US, snackproducers including Mars, Nestlé and Krispy Kreme Doughnuts put pressure on the US government to relax importcontrols, warning that otherwise they might run out of sugar.Commentators…
- Subject: Manegerial Economics & Policy The maker of a leading brand of low-calorie microwavable food estimated the following demand equation for its product using data from 26 supermarkets around the country for the month of April: Q = -5,200 - 42P + 20PX + 5.2l + 0.20A + 0.25M (2.002) (17.5) (6.2) (2.5) (0.09) (0.21) R2 = 0.55 n = 26 F = 4.88 Assume the following values for the independent variables: Q = Quantity sold per month P (in cents) = Price of the product = 500 PX (in cents) = Price of leading competitor’s product = 600 I (in dollars) = Per capita income of the standard metropolitan statistical area (SMSA) in which the supermarket is located = 5,500 A (in dollars) = Monthly advertising expenditure = 10,000 M = Number of microwave ovens sold in the SMSA in which the supermarket is located = 5,000 Using this information, answer the following questions: Compute elasticities for each variable. Do you think that this firm should cut its price to increase its market…Subject: Manegerial Economics & Policy The maker of a leading brand of low-calorie microwavable food estimated the following demand equation for its product using data from 26 supermarkets around the country for the month of April: Q = -5,200 - 42P + 20PX + 5.2l + 0.20A + 0.25M (2.002) (17.5) (6.2) (2.5) (0.09) (0.21) R2 = 0.55 n = 26 F = 4.88 Assume the following values for the independent variables: Q = Quantity sold per month P (in cents) = Price of the product = 500 PX (in cents) = Price of leading competitor’s product = 600 I (in dollars) = Per capita income of the standard metropolitan statistical area (SMSA) in which the supermarket is located = 5,500 A (in dollars) = Monthly advertising expenditure = 10,000 M = Number of microwave ovens sold in the SMSA in which the supermarket is located = 5,000 Using this information, answer the following questions: (remaining parts) Interpret your results for each variable. What proportion of the variation in sales is explained by the…22- There is positive relationship between income of the consumers and demand for ______. a. Inferior goods b. Substitute goods c. Complementary goods d. Normal goods
