Julie owns and operates a clothing store in Topeka which sells t-shirts with graphics from popular shows like Game of Thrones and Stranger Things. Suppose consumer tastes change and they no longer find t-shirts for a particular show as appealing as they do now. What impact will this change in tastes have on the market for these t shirts? O It will increase the demand for the t-shirts resulting in lowe prices. It will decrease the demand for the t-shirts resulting in lower prices It will decrease the supply for the t-shirts resulting in lower prices It will increase the demand for the t-shirts resulting in higher prices.
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- How do technologies affect changes in both supply and demand? Cite an example. Do you agree that government intervention in the market can overcome market failure? Explain your answer and cite examples. PRICE ELASTICITY: Given the quantity demanded and price for chicken, compute and determine if the elasticity of the commodity and the decision of the firm. POINT PRICE QUANTITY DEMANDED FOR CHICKEN A 100 10 B 90 20 INCOME ELASTICITY: Given the quantity demanded and price for chicken, compute and determine if the elasticity of the commodity and the decision of the firm. POINT INCOME QUANTITY DEMANDED FOR CHICKEN IN KILO A 20,000 8 B 25,000 10 CROSS ELASTICITY: Given the quantity demanded and prices for commodities below, compute and determine if the goods are either substitutes or complements. GOOD QD1 QD2 P1 P2 COFFEE 4 7 8 6 TEA 5 3 7 9 GOOD QD1 QD2 P1 P2 JUICE 8 9 10 11 SOFTDRINK 6 7 9 12Q2. Suppose the government wants to reduce the consumption of alcohol in the market byintroducing a tax per bottle on the supplier's side. The government does not know what thedemand curve looks but knows that prior to the tax, the equilibrium is at point E1, for all theconsumers in the market. Suppose there are two scenarios of alcohol consumers in the market: i) an extremely inelastic demand curve for additive adult drinkersii) a demand curve that is moderately elastic for young drinkers Please show your answer directly to a well labeled figure and explain what would occur underthese two scenarios after adding the tax on the supplier's side, and on which scenario groupthis tax would best work for the government's objective?Suppose the government of the island has decided to give consumers a more attractive price for tomatoes by imposing a fixed, per unit subsidy. Thus, start with the original demand (Qd = 450 - 100P) and supply (Qs = 50P) and analyze this new intervention, the subsidy. The subsidy works like this: each tomato seller receives a 3-dollar refund for each kilogram of tomatoes sold. Write down the equation for the new "effective supply" curve. Determine the new equilibrium quantity and equilibrium price. What is the price that the consumers will pay for their tomatoes? What is the price that the producers will effectively earn for their tomatoes, inclusive of the subsidy? How much will the government spend on tomato subsidies in this case in total? (Recall the units of measurement: P is the price in dollars per kilogram of tomatoes; and Q is the quantity of tomatoes, expressed in thousands of kilograms.) Graphically depict the new equilibrium complete with (solved) values for the new…
- Suppose tuition fees for a university increase from £3,000 to £9,000. Afterthe increase, enrolment drops by 5%.a) Calculate the price elasticity of demand for education at this university.Explain.b) Do tuition revenues at this university increase or decrease following thetuition fee change? How is this related to the price elasticity of demand foreducation at this university? Explain.c) Focusing on welfare (private and social costs and benefits), give the maineconomic argument(s) as to whether the government should subsidizehigher education or not, and if so by how much. Provide sufficient detail for your argument(s).d) In some countries higher education is provided free of charge to allstudents. Does this make such higher education a public good? Explain.e) Explain why setting up a cartel and maintaining collusion may be difficultin general.f) Explain how a maximum tuition fee of £9000 imposed by the government may facilitate collusion between universities.What are the likely consequences on the U.S. market for tobacco products for each of the events listedbelow? Which curve shifts, supply or demand?Please indicate the direction of shift. State whetherthe equilibrium price and quantity would increase,decrease, or stay the same. Show the changes usinga standard diagram with an upward-sloping supplycurve and a downward-sloping demand curve.a. The Food and Drug Administration classifiestobacco as an “addictive substance.”b. The Congress votes to raise the excise tax on alltobacco products.c. Hurricane Fran dumps 15 inches of rain onNorth Carolina and destroys 80 percent of thatstate’s tobacco crop.d. Sixteen states sue the major tobacco companiesfor billions of dollars because of tobacco-relatedcosts in their Medicaid programs.e. Medical evidence that more than two cups ofcoffee a day, considered by many to be a substitute for smoking, greatly increases the risk ofstomach cancerA firm creates an allergy medicine, call it Chemical X, and sells it on the market under patentprotection. Now suppose the patent expires, and other firms can now produce and sell Chemical X inthe market. What do we expect to happen to the market equilibrium quantity and price of ChemicalX? a)The equilibrium price and quantity will increase b)The equilibrium price and quantity will decrease c)Equilibrium quantity will decrease and equilibrium price will increase d)Equilibrium quantity will increase and equilibrium price will decrease e)The market equilibrium will not be affected
- ase:Most of the world’s governments have struggled to handle the issue of allowing consumption of forbidden goods, such as alcohol, cigarette, tobacco etc. to its population. Various methods of control have been exercised world over, such as, complete ban on these goods, a restricted consumption regime with quota on consumption or quota on selling, price floors keeping the price of these goods high up in order to reduce demand and imposing high taxes to generate same effect. None of thee seem to have worked to control the availability and consumption of such goods by the society. These are called social bads, as they not only are harmful for the person consuming them, there are external effects on others, such as family and friends and the larger society.In Rampur, Alcohol are forbidden, so people trade Alcohol bottles in a black market. The Alcohol demand is QD = 12 − P , and the supply is Qs = 2P(a) Find the equilibrium price and quantity in the black market.(b) The government…Consideracompetitivemarketwheremarketdemandandthemarketsup- ply are given, respectively, byQD =1000−100P and QS =100P a)Findthecompetitiveequilibriumprice,quantity,andproducersurplus. (b) Suppose the government wants to help the consumers by imposing a price ceiling of Pc = 4. Find the market equilibrium price, quantity, and producer surplus. (c) Suppose now the producers are complaining, and the government de- cides to keep the price ceiling policy, but at the same time, the government will give a subsidy of s per unit to the producers. What is value of s that can make the producers as well off as before imposing the price ceiling (that is, producer surplus equals to the value in part (a))? Please express final numerical answers in decimal formatSuppose the government of the island has decided to make tomatoes more affordable to consumers by imposing a fixed per unit subsidy. Thus, start with the original demand (Qd = 50 – 5P) and supply (Qs = 5P – 25) and analyze this new intervention, the subsidy. The subsidy works like this: tomato sellers receive a $4 refund from the government for each kilogram of tomatoes they sell to consumers. • Write down the equation for the new "effective supply" curve. • Determine the new equilibrium quantity and equilibrium price. • What is the price that the consumers will pay for their tomatoes? • What is the price that the producers will effectively earn for their tomatoes, inclusive of the subsidy? • How much will the government spend on tomato subsidies in this case in total? (Recall the units of measurement: P is the price in dollars per kilogram of tomatoes; and Q is the quantity of tomatoes, expressed in thousands of kilograms.) • Produce a new graph depicting the new, post-subsidy…
- Suppose the government of the island has decided to make tomatoes more affordable to consumers by imposing a fixed per unit subsidy. Thus, start with the original demand (Qd = 50 – 5P) and supply (Qs = 5P – 25) and analyze this new intervention, the subsidy. The subsidy works like this: tomato sellers receive a $4 refund from the government for each kilogram of tomatoes they sell to consumers. Write down the equation for the new "effective supply" curve. Determine the new equilibrium quantity and equilibrium price. What is the price that the consumers will pay for their tomatoes? What is the price that the producers will effectively earn for their tomatoes, inclusive of the subsidy? How much will the government spend on tomato subsidies in this case in total? (Recall the units of measurement: P is the price in dollars per kilogram of tomatoes; and Q is the quantity of tomatoes, expressed in thousands of kilograms.) Produce a new graph depicting the new, post-subsidy equilibrium…Suppose the government of the island has decided to make tomatoes more affordable to consumers by imposing a fixed per unit subsidy. Thus, start with the original demand (Qd = 50 – 5P) and supply (Qs = 5P – 25) and analyze this new intervention, the subsidy. The subsidy works like this: tomato sellers receive a $4 refund from the government for each kilogram of tomatoes they sell to consumers.In the context of Pakistan’s society for each of the following products, indicate the correct type of price elasticity of demand or supply and also justify your answer: a) An expensive necklace to be sold at an auction. b) Demand for COVID-19 Vaccine. c) Production of gold mining. d) Demand for gold.