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- When due to change in price of a good, total expenditure on the good remains unchanged, then demand is:-explain the difference between the following: complements and substitutes in production complements in production (or consumption) understand the implications of those differences for changes in demandIf 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.
- find marketequilibrium price for quantity for a good that has the following supply and demand functions. Supply Ps=Q^2+20q Demand Pd=-2q^2+10q+15400The research department of the Corn Flakes Corporation (CFC) estimated the demand of the corn flakes it sells:Qx =2.0 -4.0Px +3.0I +1.6Py -6.0Pm +2.0A Where Qx =Sales of CFC cornflakes, in millions of 10-ounce boxes per year; Px= the price of CFC cornflakes, in dollars per 10-once box; I= personal disposable income in millions of dollars per year; Py= price of competitive brand of cornflakes, in dollars per 10-once box; Pm= price of milk in dollars per quart; and A= advertising expenditures in thousands of dollars per year. Given: Px = $4, I=$8, Py= $5.00, Pm= $2, and A= $4 a. Find the Qx of CFC cornflakes at the given values of the determinants of demand for cornflakes. b. What is the price elasticity of demand for cornflakes? Is the demand for cornflakes price elastic, or inelastic? Should management increase, or lower if it desires to increase the operating revenue? c. What is income elasticity of demand for cornflakes? Is the demand for cornflakes income elastic, or inelastic?…Suppose rice is normal, demand is elastic and the price of rice rises. What happens to total spending on rice? Explain.
- The research department of the Corn Flakes Corporation (CFC) estimated the demand of the corn flakes it sells: Qx =1.0 -2.0Px +1.5I +0.8Py -3.0Pm +1.0A Where Qx =Sales of CFC cornflakes, in millions of 10-ounce boxes per year; Px= the price of CFC cornflakes, in dollars per 10-ounce box; I= personal disposable income in millions of dollars per year; Py= price of competitive brand of cornflakes, in dollars per 10-ounce box; Pm= price of milk in dollars per quart; and A= advertising expenditures in thousands of dollars per year. Given: Px = $2, I=$4, Py= $2.50, Pm= $1, and A= $2 What is the cross-price elasticity of demand for good X as the result of a given percentage change in the price of a competitive brand Y? Is the demand for good X cross-price elastic, or inelastic? Are good X and Y substitutes, or complementary goods? How you know?30 - Which of the following will occur if the demand curve for a good X is affected by an increase in the price of good X? a) The demand curve shifts to the right B) The demand curve shifts to the left C) There is an upward movement on the demand curve. D) The slope of the demand curve decreases. TO) There is a downward movement on the demand curve.If the price of domestic airline tickets increases, then, ceteris paribus:A. the demand for domestic air travel will increase.B. the demand for car rentals, a complement in consumption, will increase.C. the demand for domestic air travel will decrease.D. the demand for car rentals, a complement in consumption, will decrease.E. the demand for car rentals, a substitute in consumption, will decrease.
- Suppose that when the price of a good rises by 8%, the quantity demanded that good falls by 13%. What is the approximate change in total expenditure (or total revenue)? Express your answer as a percentage. I got -6% but it is incorrect.Suppose that imports decreases by 10 and the other components remain, calculate the new equilibrium level of income.Interpret what an increase in demand and an increase in supply mean. Discuss the causes of an increase in demand and an increase in supply. How are increases in demand and supply expressed graphically?
