Price£/unit'D3D1D2QuantityFigure 4 Supply and demand curves for a normal goodFigure 4 shows a supply (S,) and demand curve (D;) for a normal good – illustrated by the continuouslines. Both curves may shift left or right depending on the situation described below, as illustrated by thedotted and dashed lines. The market is initially in equilibrium at point E given by the intersection of thesupply curve S, and demand curve D1.Consider the situation below and select the letter that corresponds to the new point of equilibrium thatwould arise in the market from the list provided.A major natural disaster disrupts production D3D1D2QuantityFigure 4 Supply and demand curves for a normal goodFigure 4 shows a supply (S1) and demand curveAa normal good – illustrated by the continuouslines. Both curves may shift left or right dependi Bie situation described below, as illustrated by thedotted and dashed lines. The market is initially inDrium at point E given by the intersection of thesupply curve S, and demand curve D1.EConsider the situation below and select the lettel Grresponds to the new point of equilibrium thatwould arise in the market from the list provided.A major natural disaster disrupts production

Macroeconomics and microeconomics are the two important branches of economics and both are important…

Price £/unit E B. 'D3 D1 D2 Quantity Figure 4 Supply and demand curves for a normal good Figure 4 shows a supply (S1) and demand curve (D;) for a normal good – illustrated by the continuous lines. Both curves may shift left or right depending on the situation described below, as illustrated by the dotted and dashed lines. The market is initially in equilibrium at point E given by the intersection of the supply curve S, and demand curve D1. Consider the situation below and select the letter that corresponds to the new point of equilibrium that would arise in the market from the list provided. • Amajor natural disaster disrupts production

Price £/unit E B. 'D3 D1 D2 Quantity Figure 4 Supply and demand curves for a normal good Figure 4 shows a supply (S1) and demand curve (D;) for a normal good – illustrated by the continuous lines. Both curves may shift left or right depending on the situation described below, as illustrated by the dotted and dashed lines. The market is initially in equilibrium at point E given by the intersection of the supply curve S, and demand curve D1. Consider the situation below and select the letter that corresponds to the new point of equilibrium that would arise in the market from the list provided. • Amajor natural disaster disrupts production

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter5: Markets In Motion And Price Controls

Section: Chapter Questions

Problem 10P

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a. Suppose the market demand for shirts is given by Qd = 300 - 20P and the market supply for shirts is given by Qs = 20P – 100, where P = price (per shirt). i. Graph the supply and demand schedules for shirts between price = $5 through to $15 (increase in units of 1, i.e. 5, 6, 7...). Using the equations provided, in equilibrium, how many shirts would be sold and at what price? ii. iii. What would happen if suppliers set the price of shirts at $15? Explain the market adjustment process.
1. The weekly demand (Qd) and supply (Qs) functions for a good X are given by:-Qd = 1000 – 5pQs = -400 + 15p, where P = Price per unit (R)(i) Draw the demand and supply curves on a graph and find the equilibrium priceand quantity (ii) If the demand function changes to 1200 – 5P, show the changes to part (i)above. (iii) Suppose a subsidy of R40 per unit is subsequently granted to producers ofgood X. Determine the new equilibrium price and quantity. (b) Use suitable examples to explain the likely effects of a price ceiling. (c) What do you understand by the ‘Substitution and Income effects’ of a change inprice of a good. (d) Elaborate on the factors influencing Price Elasticity of Demand (PED) and PriceElasticity of Supply (PES) of a good. 2. (a) Explain the concepts of Price Elasticity of Demand (PED), IncomeElasticity of Demand (YED) and Cross Elasticity of Demand (CED)(b) To what extent can PED be important to:-(i) a government, (ii) managers of hypermarkets ‘3. (a) Compare the…
The figure depicts the market for shoes. Suppose that a less expensive material for making shoes is developed. What effect will this event have on supply and demand in the shoe market? Demonstrate your answer graphically. Instructions: Use the tool provided "New line" to draw either a new demand or supply curve that reflects the market effect of this event. Plot only the endpoints of the line. if a less expensive material developed, the- will-. This will cause the equilibrium price to- and the equilibrium- quantity to-
Q3Use a matrix method to find the equilibrium prices and quantities where the supply and demand functionsfor Good 1, Good 2 and Good 3 are asQd1 = 50 − 2P1 + 5P2 − 3P3, Qs1 = 8P1 − 5Qd2 = 22 + 7P1 − 2P2 + 5P3, Qs2 = 12P2 − 5Qd3 = 17 + P1 + 5P2 − 3P3, Qs3 = 4P3 − 1
Identify the effect each scenario would have on the market for various products.For each scenario:- Label the P & Q of the graph as well as the original supply curve, demandcurve, and market equilibrium (S1, D1, E1).- Identify whether it would first cause a shift in supply or demand and draw andlabel the new curve and market equilibrium (S2 or D2, E2)-Identify whether the equilibrium price and quantity will increase or decreasea. Insects kill half the nation’s tomato crop. What will happen to the market fortomatoes?b. The price of salmon, a substitute for tuna, skyrockets. What will happen to themarket for tuna?c. New assembly line technology makes it cheaper to produce car parts. Whatwill happen to the market for cars?
es The graph below shows the market for oats. Price per bushel 12 11 10 9 8 10 432 S 4 0 10 50 70 100¹10120 30 90 80 60 40 20 Quantity per period (in millions of bushels) S Tools Sz Prev 4 of 8 # Next >
Choose a good that you like and work through the methodology to construct a demand curve. Note: please think about the axes being the good that you really like as a composite of all other goods. Start by stating the assumptions you need to make to determine demand, and then show, using diagrams, how the demand for your good is determined. Be sure to explain it carefully and comprehensively. Then we would like you to construct consumer demand for a Giffen good diagrammatically—that is, a diagram that reflects that when the price increases, the quantity demanded also increases.show an understanding of the major differences between the good mentioned above and the Giffen good. What goods can you suggest that might demonstrate this difference? Explain your conclusions.
Let's say that the demand side of the market for Blue Soda is comprised of 3 leading agents/individuals: Anthony, Brad, and Claire. Let P be the price of 1 liter of Blue Soda, and Qd be the quantity demanded of Blue Soda in liters. Here are the key points to the problem: - Anthony buys only one liter of Blue Soda if the price of it falls below his choke price of $10. - Brad's demand for Blue Soda is defined by QdB = 5 - P/2 - Claire buys 2 liters if the price is below $5, 1 liter if the price is between $5 and $10, and nothing if the price is above $10. Using this information, please sketch the individual demands and the market demand by aggregating the three agents/individuals. Label the graph clearly. Please make sure to sketch the individual demands first and then sketch the market demand.
The buyers side of the market for laser tag tickets consists of two types of consumers who demand curves are shown below. 18 24 48 Tickets/yr Tickets/yr a. Graph the market demand curve on the graph below. Label everything (use units of 4 for the x-axis so it fits). Hint: It is helpful to determine the equations of the lines using y=mx+b for each so you can plug in prices and get quantities or plug in quantities and get price. b. Shade in the region that represents the total consumer surplus in the amusement park if tickets sell for $12 each. Price ($/ticket) Price ($/ticket)
Price £/unit E D3 D1 D2 Quantity Figure 4 Supply and demand curves for a normal good Figure 4 shows a supply (S,) and demand curve (D1) for a normal good – illustrated by the continuous lines. Both curves may shift left or right depending on the situation described below, as illustrated by the dotted and dashed lines. The market is initially in equilibrium at point E given by the intersection of the supply curve S, and demand curve D1. Consider the situation below and select the letter that corresponds to the new point of equilibrium that would arise in the market from the list provided. • Amajor natural disaster disrupts production
I intend to sell food coupons from my restaurant to two groups of customers, namely, general consumers and students, whose demand curves are given by Qg and Q, respectively, Qg=500 -5P Q₁ = 200 - 4P; where Q stands for quantity demanded and P is price. (a) Can you graph the two demand curves with P on the vertical axis and Q on the horizontal axis? If I price the coupons at $35, can you identify the quantity demanded by each group? (b) Also, find the price elasticity of demand for each group at the current price and quantity. (c) Am I maximizing my revenue by charging $35 for each coupon? Explain. (d) What price should I charge from each group if I want to maximize the revenue collected from coupon sales? (e) Normally, sellers try to maximize profits instead of revenue. In this case, explain if maximizing revenue is equivalent to maximizing profits
Assume that the Demand elasticity of a good is -1 and the Supply elasticity is +2. Assume also that (i) that the price of a complement decreases and therefore Demand shifts out by +2% and (ii) because one of the inputs in production declined in price, the Supply shifts by +2%. In partial equilibrium, the % change in the equilibrium price is -2% -1% 0% 1% 2%