36- Assume that, when household income rises by 30% and the price of good X remains unchanged, the quantity demanded of good X decreases by 15%. Then, in this case, the income elasticity of demand for good X is.. . , and you know that good X is... 49-The fundamental determinant of the elasticity of supply is how easily production can be increased without increasing unit cost. If it is difficult to increase production of a good at constant unit cost, the good is likely to have relatively _supply, since producers cannot easily choose to produce more if the price of the good rises. Manufacturing both cars and needles requires steel as an input. Which supply curve is likely to be more elastic? # Needles # Cars

36- Assume that, when household income rises by 30% and the price of good X remains unchanged, the quantity demanded of good X decreases by 15%. Then, in this case, the income elasticity of demand for good X is.. . , and you know that good X is... 49-The fundamental determinant of the elasticity of supply is how easily production can be increased without increasing unit cost. If it is difficult to increase production of a good at constant unit cost, the good is likely to have relatively _supply, since producers cannot easily choose to produce more if the price of the good rises. Manufacturing both cars and needles requires steel as an input. Which supply curve is likely to be more elastic? # Needles # Cars

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Exercise: You study the arms market represented by the following demand function qd = 150 - p - 4pa, with p the price of an ammunition and pa the price of chromium molybdenum alloy, a steel used to make firearms. The supply function is given by q³ = -50 + 26p - 5pp, with p, the price of powder (an essential input for making ammunition) QUESTION: Compute the direct and cross-price elasticity of demand at equilibrium prices and quantities, for Pr=15 and p,=1
1. Suppose the demand for towels and supply of towels are given by the below: QD = 100 - 4P QS = P a. Find the equilibrium price and quantity using demand and supply functions above. b. Plot demand and supply curve on the same graph and point out the equilibrium quantity and price. You should draw each graph precisely with intercepts and slopes. c. Solve for the price elasticities of demand and supply at the equilibrium point. Which is more elastic: demand or supply? Simply explain why. d. Suppose there was a demand shock so that at each price 20 more towels are demanded since consumers want more. Plot the new demand curve on the graph that you derive in part (a). Find the new equilibrium price and quantity. (Hint: You may derive a new demand function by adding a constant to find a new equilibrium price and quantity.)
Consider public policy aimed at alcohol consumption. a) Studies indicate that the price elasticity of demand for alcohol is about 0.5. If a bottle of rum currently cost $22 and the Government wants to reduce alcohol consumption by 25 percent, by how much should it increase the price? b) What will be the impact of an increase in price on the revenues of the alcohol manufacturer? c) If the Government permanently increases the price of alcohol, will the policy have a larger effect on the consumption of alcohol one year from now or five years from now? d) Studies also find that teenagers have higher price elasticity than do adults. Why might this be true?
Ab 32 Economics Elasticity is the relationship between price and available quantity in an economic market. Choose any three products. Then classify and describe their price elasticity of demand (relatively inelastic, relatively elastic, perfectly elastic, perfectly inelastic, unitary elastic). Be sure to include three different types of elasticity. Discuss what happens to demand for each product when there is a price change. With customers in mind, which elasticity applies to your selected business? Explain why did you s
. Determinants of the price elasticity of demand Consider some determinants of the price elasticity of demand: • The availability of close substitutes • Whether the good is a necessity or a luxury • How broadly you define the market • The time horizon being considered A good without any close substitutes is likely to have relatively...........................( elastic/inelastic) demand, since consumers cannot easily switch to a substitute good if the price of the good rises. A good’s price elasticity of demand depends in part on how necessary it is relative to other goods. If the following goods are priced approximately the same, which one has the least elastic demand?(multiple choice) a) Sports car b) A heart valve for heart attack victims The price elasticity of demand for a good also depends on how you define the good. Organize the goods found in the following table by indicating which is likely to have the most elastic…
hi! pls answer questions number 3 and number 4 only. thank you Suppose the price of good x has increased from Php5 to Php10 per unit. Using the illustration below, compute the price elasticity of demand using the midpoint elasticity formula. Is the demand for the good elastic, inelastic or unitary elastic? 2. If the price of hamburger increases by 16% and the quantity demanded decreases by 6%, what is the price elasticity of demand? Is it elastic, inelastic or unitary elastic? 3. A 20 percent increase in Ramon’s income brings about a 30 percent decrease in the demand for locally made shoes. What is the income elasticity of demand? Is the good a normal good or an inferior good? Explain briefly your answer. 4. Suppose a person with an income of $20,000 per year buys 10,000 oranges per year at a price of $1 per orange. When the person’s income rises to $25,000, he or she buys 12,000 oranges per year at the same price per orange. What is the implied income elasticity of demand for…
Assume that the slope of the demand curve for carrots is (-5) If the price of carrots is $150 per ton and the quantity demanded at this price is 60 tons, then the elasticity of demand at this price is: Select one: a. 2 b. 5 c. 0.2 d. 0.5
3°/ a) Suppose the price of flour increases from $0.60 to $1.10 a pound and the quantity demanded decreases from 100 pounds to 60 pounds. Using the midpoint method, what is the price elasticity of demand for flour? Is the demand for flour elastic or inelastic? b) A 15 percent increase in income brings about a 25 percent decrease in the demand for a good. What is the income elasticity of demand and is the good a normal good or an inferior good?
Year 1 2 Income $10,000 $10,000 Price of Good X $5 $10 Using the above table and the Midpoint Method for Elasticity, suppose now that the income in year 1 increases from $10,000 to $20,000, and as a result, the quantity demanded for good y in year 1 changes from 20 units to 30 units. What is the income elasticity of demand for good Y in year 1? Is Y a normal or inferior good? Explain how you know whether it is a normal or inferior good. Blank 1 Income Elasticity of Demand: Blank 1 (Round your answer to TWO-decimal places; you MUST enter the decimal value even if it is a '0' - ie: 1.20 NOT 1.2.) Blank 2 Good Y is a Blank 2 (normal / inferior) good. Blank 3 Good Y is a normal/inferior good, because Blank 3. QD of Good X 10 units 8 units QD of Good Y 20 units 30 units Add your answer Add your answer Add your answer
Please answer 1 and 2
5. this question is too complicated