Now let income change by 100. What will be the value of the constant term in the new Qd equation and what will be the values of the new equilibrium price and quantity?
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- As a general rule, is it safe to assume that a change in the price of a good will always have its most significant impact on the quantity demanded of that good, rather than on the quantity demanded of miller goods? Explain.If the price of a good rises, then the effect on the income of the factors that are used intensively in itsproduction will beA) to raise income by an absolute amount that is less than the rise in prices.B) to raise income by an absolute amount that is more than the rise in prices.C) to raise income by a smaller percentage than the rise in prices.D) to raise income by a greater percentage than the rise in prices.Suppose that a drug that was illegal has been made legal. It is observed that the total expenditure on this drug falls with legalisation. While non-economists might explain this in terms of a change inconsumer tastes, as economists we can explain this while sticking with the assumption that consumer tastes have not changed. Draw a demand and supply diagram showing the case where total expenditureclearly and unambiguously falls (with no shift in the demand curve) and provide a written explanation. ( maximum word limit: 100 words)
- In 2018, a cold front in Barbados increased both the demand for water heaters andgasolines. The usage of gasoline was 581 tonnes, an increase from 499 tonnes in theprevious year. The Petroleum Company of Barbados advised Government officials thatdemand could outweigh supply and asked companies to increase the supply. They alsoasked major gasoline users, such as power plants, to reduce demand. Illustrate the effect of the cold front on the demand for gasoline using a demandcurve diagram over the two years.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.Does an in income always shift income demand carves (for goods) to the right? why or why not?
- Darwin consumes cigarettes (x1) and other goods (x2). His preferences are given by UD(q1,q2)=4lnq1 +q2The quantity of good 2 is measured in units of income and so you can assume that throughout this problem, the price of good 2 is normalized p2 = 1 (a) Using the Lagrangian, derive Darwin’s uncompensated demand for cigarettes: D1D(p1,Y). Note that we are holding p2 =1 and so that is not a variable in the demand function. Using the Lagrangian, derive the equation λ∗(p1, Y ). Provide an economic interpretation of the Lagrange multiplier. Does it vary with income, Y ?Suppose that the market demand for Turkey is given by: Q_(T)=2-8P_(T)+2P_(C)+0.0015I Where Q_(T) is annual quantity demanded of turkey in million pounds, P_(T) is the price of turkey per pound, P_(C) is price of chicken per pound, and I is the average household income in dollars per year. a. Find the annual quantity demanded of turkey if the price turkey is $2.00 per pound, price of chicken is $1.50 per pound and the annual household income is $30,000.In 2018, a cold front in Barbados increased both the demand for water heaters andgasolines. The usage of gasoline was 581 tonnes, an increase from 499 tonnes in theprevious year. The Petroleum Company of Barbados advised Government officials thatdemand could outweigh supply and asked companies to increase the supply. They alsoasked major gasoline users, such as power plants, to reduce demand.i. Illustrate the effect of the cold front on the demand for gasoline using a demandcurve diagram over the two years. ii. Assuming the Petroleum Company of Barbados did not issue a directive for anincrease in supply and a decrease in demand, explain the problem that would existin the economy and how would this be corrected over time. iii. Illustrate the effect of major gasoline suppliers increasing supply as well as usersreducing their demand. iv. Discuss one factor EACH that you think influence demand and supply for waterheaters. Provide examples v. Is demand for gas is price elastic or price…
- In 2018, a cold front in Barbados increased both the demand for water heaters andgasolines. The usage of gasoline was 581 tonnes, an increase from 499 tonnes in theprevious year. The Petroleum Company of Barbados advised Government officials thatdemand could outweigh supply and asked companies to increase the supply. They alsoasked major gasoline users, such as power plants, to reduce demand. i. Illustrate the effect of the cold front on the demand for gasoline using a demandcurve diagram over the two years. ii. Assuming the Petroleum Company of Barbados did not issue a directive for anincrease in supply and a decrease in demand, explain the problem that would existin the economy and how would this be corrected over time.Suppose the current price of a good is $125. At this price, the quantity supplied is 150 units, and the quantity demanded is 110 units. For every $1 decrease in price, the quantity supplied decreases by 5 units and the quantity demanded increases by 3 units. At the current price, the quantity demanded isless than the quantity supplied. This means that the market is currently experiencing a . In order to adjust, the market price will until the quantity demanded and quantity supplied are equal. The result is an equilibrium quantity of and an equilibrium price of .Suppose income-tax rates are increased and as a result consumers experience a decrease in income earned from working. Basic microeconomics predicts that, Demand for normal goods will rise. Demand for inferior goods will rise. Demand for normal goods will fall. Demand for inferior goods will rise and demand for normal goods will fall.
