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4.2 List and discuss two (2) reasons for the downward sloping shape of the
aggregate demand curve.
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- Explain the major determinants of demand and supply theorotically. Support your explanation by graphExplain the major determinants of demand and supply theorotically.Support your explanation graph.show grahicallyWhat is Microeconomics? What is the price elasticity of demand? What are the various methods of computing elasticity of supply? Explain the concept of positive and normative economics? Enumerate the 3 Steps in formulating policy?
- 1. In the following, we are going to use the microeconomic theory we have developed in class to better understand the potential impact of a rise in the price of gasoline due to a tax increase. We can use the following "constant elasticity" demand function, Qg = BP*Y³ ,as a reasonable structure to assume for the demand for gasoline. The reason it is named as such is that the exponents for the price (P) and income (Y), represent the price elasticity of demand (ɛ) and price elasticity of supply (5) for all levels of each variable. Use the formula for price elasticity of demand to confirm that the parameter ɛ, in fact, represents this demand equation's price elasticity. Note that you would receive an analogous result if you did this for income elasticity of demand. b. Use the following estimated values to "calibrate" the demand function given above, that is find a plausible value for the parameter ß based on average annual consumption, average price per gallon, and average income. Once you…Discuss the two main types of related goods according to demand and supply analysisBy using diagram, show the impact of a shift of demand or supply on the equilibrium point.
- create your own scenario of the determinant of demand and determinant of supply.Why do we need to assume other things equal (constant) when justifying the law of demand? Explain in details with an example.3) Beginning from a demand-supply model in equilibrium. Graphically illustrate and explain the following events (i.e., changes). Note the change in price and quantity both on the graph and in your description of the change, i.e., change in quantity demanded or quantity supplied (per class lecture notes and video lecture examples). a. You are studying the market for video games in the COVID-19 recession, and you observe that the price of Xbox and competitor consoles (a complement good) due to supply chain constraints. (i.e., the price of a complement good increases).
- Please no written by hand and no image Suppose that both groups of students are on the right track, and each of the events described above are partially responsible for the decrease in the price of chicken wings. Based on your analysis of the explanations offered by the two groups of students, how would you determine which of the possible causes was the dominant cause of the decrease in the price of chicken wings? If the equilibrium quantity of chicken wings decreases, then the supply shift in the market for chicken wings must have been larger than the demand shift. If the equilibrium quantity of chicken wings decreases, then the demand shift in the market for chicken wings must have been larger than the supply shift. If the price decrease was small, then the supply shift in the market for chicken wings must have been larger than the demand shift. Whichever change occurred first must have been the primary cause of the change in the price of chicken wings.Consider the market for minivans. For each of the following events, identify which of the determinants of supply and/or demand is affected and indicate an increase or decrease in supply and/or demand. Illustrate the shift of a supply curve and/or demand curve in each of the following cases. Describe the change in the equilibrium. 1. People decide to have more children 2. A strike by steelworkers raises steel prices 3. Engineers develop new automated machinery for the production of minivans 4. The price of sports utility vehicles rises. 5. A stock market crash lowers people's wealth.The law of demand is the first and primary law of economics. Do you agree? Explain the law of demand with the help of a clearly labelled diagram. [Answer in 150 – 200 words] [Draw in paper; take photo and paste/Use MS Word/add screenshot] b) Though, the law of demand is the primary law of economics, it is subject to certain limitations in the form of exceptions. Discuss any five such exceptions to law of demand with valid examples.
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