EBK MICROECONOMICS
5th Edition
ISBN: 9781118883228
Author: David
Publisher: YUZU
expand_more
expand_more
format_list_bulleted
Question
Chapter 1, Problem 1.5P
To determine
To compare the
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Assume that you are told that because of some changes, the equilibrium price increased but it is unknown if the equilibrium quantity increased, remained the same, or decreased. Which of the following would be consistent with this outcome?a. There was a decrease in input costs and consumers expected lower income.b. Consumers expected a lower price and firms expected a higher price.c. There was a decrease in income (the good is inferior) and a decrease in the number of firms.d. There was a positive change in consumer tastes and an increase in productivity.
When demand is _______ consumers are _______ to price changes and the price elasticity of demand is _______.a. elastic, relatively sensitive, greater than one (in absolute value)b. inelastic, completely insensitive, equal to one (in absolute value)c. inelastic, relatively sensitive, less than one (in absolute value)d. unit elastic, hyper-sensitive, equal to zeroe. perfectly elastic, hyper-sensitive, equal to one (in absolute value)…
Assume that supply for cars increases for any given price and, at the same time, the demand for cars reduces for any given price. You can predict:
a. That the price of cars will unambiguously increase, while the car sales may increase or decrease.
b. That car sales will unambiguously decrease, while the car price may increase or decrease.
c. That the price of cars will unambiguously decrease, while the car sales may increase or decrease.
d. That car sales will unambiguously increase, while the car price may increase or decrease.
Using the supply and demand functions below, derive the demand and supply curves if
Y=$55,000
and
pc=$9.
What is the equilibrium price and quantity of coffee?
Part 2
The demand function for coffee is
Q=8.5−p+0.01Y,
where Q is the quantity of coffee in millions of pounds per year, p is the price of coffee in dollars per pound, and Y is the average annual household income in high-income countries in thousands of dollars.
The coffee supply function is
Q=9.6+0.5p−0.2pc,
where
pc
is the price of cocoa in dollars per pound.
Chapter 1 Solutions
EBK MICROECONOMICS
Ch. 1 - Prob. 1RECh. 1 - Prob. 2RECh. 1 - Prob. 3RECh. 1 - Prob. 4RECh. 1 - Prob. 5RECh. 1 - Prob. 6RECh. 1 - Prob. 7RECh. 1 - Prob. 1.1PCh. 1 - Prob. 1.2PCh. 1 - Prob. 1.3P
Ch. 1 - Prob. 1.4PCh. 1 - Prob. 1.5PCh. 1 - Prob. 1.6PCh. 1 - Prob. 1.7PCh. 1 - Prob. 1.8PCh. 1 - Prob. 1.9PCh. 1 - Prob. 1.10PCh. 1 - Prob. 1.11PCh. 1 - Prob. 1.12PCh. 1 - Prob. 1.13PCh. 1 - Prob. 1.14PCh. 1 - Prob. 1.15PCh. 1 - Prob. 1.16PCh. 1 - Prob. 1.17PCh. 1 - Prob. 1.18PCh. 1 - Prob. 1.19PCh. 1 - Prob. 1.20PCh. 1 - Prob. 1.21P
Knowledge Booster
Similar questions
- 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.?arrow_forward1. 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,…arrow_forwardSuppose the National Institute of Health publishes a study finding that coffee drinking reduces the probability of getting colon cancer. How do you imagine this will affect the market for coffee? Which determinant of demand or supply is being affected? Show graphically with before and after curves on the same axes. How will this change affect the equilibrium price and quantity of coffee? Explain your reasoning.arrow_forward
- At a price of $4.61 per pound, the supply for cherries is 16,107 pounds, and the demand is 10,362 pounds. When the price drops to $4.18 per pound, the supply decreases to 10,789 pounds and the demand increases to 12,724 pounds. Assume that the price-supply and price-demand equations are linear. What is the equilibrium price?arrow_forwardHow shifts in demand and supply affect equilibrium Consider the market for pens. Suppose that the number of students with an allergy to pencil erasers increases, causing more students to switch from pencils to pens in school. Moreover, the price of plastic, an important input in pen production, has dropped considerably. On the following graph, labeled Scenario 1, indicate the effect these two events have on the demand for and supply of pens. Note: Select and drag one or both of the curves to the desired position. Curves will snap into position, so if you try to move a curve and it snaps back to its original position, just drag it a little farther. Scenario 1DemandSupply012345678910109876543210PRICE (Dollars per pen)QUANTITY (Millions of pens)Demand Supply Next, complete the following graph, labeled Scenario 2, by shifting the supply and demand curves in the same way that you did on the Scenario 1 graph. Scenario 2DemandSupply012345678910109876543210PRICE…arrow_forwardAssume that the demand curve D(p) given below is the market demand for widgets: Q=D(p)=1651−14pQ=D(p)=1651-14p, p > 0 Let the market supply of widgets be given by: Q=S(p)=−5+10pQ=S(p)=-5+10p, p > 0 where p is the price and Q is the quantity. The functions D(p) and S(p) give the number of widgets demanded and supplied at a given price. What is the equilibrium price? Please round your answer to the nearest hundredth. Answer (1 point) Save your answer What is the equilibrium quantity? Please round your answer to the nearest integer. Answer (1 point) Save your answer What is the consumer surplus at equilibrium? Please round the intercept to the nearest tenth and round your answer to the nearest integer. Answer (1 point) Save your answer What is the producer surplus at equilibrium? Please round the intercept to the nearest tenth and round your answer to the nearest integer. Answer (1…arrow_forward
- Suppose you are an analyst in the oil refinery industry and are responsible for estimating the equilibrium price and quantity of home heating oil. To do so, you must consider factors that can affect the supply of and demand for heating oil. Determinants of the demand for heating oil include household income, the price of an oil furnace (a complementary good for heating oil), and the price of natural gas (a substitute good for heating oil). Determinants of the supply of heating oil include the cost of crude oil and the cost of refining crude oil into home heating oil. Use the calculator to help you answer the following questions. You will not be graded on any changes you make to the calculator. Initially, the price of natural gas is $10 per 1,000 cubic feet, the price of an oil furnace is $2,000, the average annual household income is $40,000, the cost of crude oil is $25 per barrel of heating oil, and the cost of refining oil is $15 per barrel of heating oil. The equilibrium…arrow_forwardSuppose the technology to manufacture computers improves but due to some recession in the economy, the income of the consumers falls. Assuming computers to be a normal good, what will be the equilibrium quantity and price for computers in this case?"arrow_forwardAssume that in an effort to help consumers, the government decides to reduce the amount of taxes it imposes on sellers of gasoline, that is, sellers are required to pay the government a smaller fee for each gallon of gas they sell. In the market for gas, this would have the effect of causing an increase in the supply of gas and a decrease in equilibrium price. True Falsearrow_forward
- There are about 2500 leather wallets available in a country. When the price of these wallets is raised to $3000, economists believe that people may not be willing to buy them. On the other hand, if the price is decreased to $0, the 2500 leather wallets will be sold out. However, no producers will be willing to sell them at $0. If the price is set to $1000, producers will be willing to sell all 2500 leather wallets. Create the demand and supply equation for the leather wallets based on the given information.arrow_forwardSuppose 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 is _____ 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 _______ .arrow_forwardFor the following statements, please indicate whether each is true or false: A fall in the price of shoes would shift the demand curve for shoes to the right. As the price of a product falls, the quantity demanded of that product will increase, other things equal. According to the law of demand, there is a positive relation between price and the quantity demanded. If the demand for potatoes increases as income decreases, economists would consider potatoes as a normal good. If the demand for eggs decreases as the price of bacon increases, economists would consider eggs and bacon as complements. A supply curve shows the minimum price producers are willing to charge. The supply curve will shift upwards on a graph if the prices of inputs into production go up. Since you answered the first three based on your policy, could I please have the answer to 4,5 and 6 pleasearrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Exploring EconomicsEconomicsISBN:9781544336329Author:Robert L. SextonPublisher:SAGE Publications, Inc
Exploring Economics
Economics
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:SAGE Publications, Inc