Consider an equilibrium of a single product market jointly determined by a supply function q* = a, + a, •p° + U and a demand function q* = Bo + B1 • p* +V, where q* indicates the equilibrium quantity and p*indicates the equilibrium price, then O A. we will run into the simultaneous equations problem, which will cause estimation inconsistency. O B. we can have bi-directional causality between q* and p*. O C. q* and p* will both be endogenous. O D. all of the above.
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- 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 − 1Suppose that the demand function is given as follows: 0 =1440– 3P +P, -I and Q, --240+ P where P denotes pnice of good x P, denotes the price of a related product y, I denotes income. a-) Find equilibnunm price and output (P and O) as a function of exogenous variables income () and price of the related product (P, ). Usng comparative statics, find how the equilibrium price and output change as Price of the related product ((P.) and income (I) change (ie find -) Support your findings with graphs (how demand and supply are affected?) Are goods x and y complements or substitutes? Is good x a nomal good or an inferior good?We need to use implicit differentiation to derive comparative statics results in the case where: There are multiple exogenous shocks to the market at once. The demand and supply functions are linear. We are studying a dynamic process of adjustment. We do not have an exact solution for equilibrium prices in closed form. O More than one of the above. No answer.
- Globalization’s fast pace around the world has helped people to adopt new trends and fashion at a higher rate as compared to the era with low level of FDI and trade. In Pakistan the growing concentration for Coffee cafes has opened new horizons for the investors to endow. If TYJ using the annual sales data of Gloria Jeans’ estimated the demand function for their upcoming venture in coffee market, answer the following: QC=10,000-20PC Derive the demand curve and explain the relationship between demand and price. If TYJ wishes to sell 5,000 cups of coffee a day, find the price for selling the same. Suppose if the price is determined at 350 identify the quantity TYJ would be able to sell. Suppose Espresso increases its price for per cup of coffee, illustrate and explain the impact it might create on the demand of coffee provided by TYJ. Calculating the risk, help TYJ identify at what price the demand for coffee would fall to zero. Also, explain in your opinion the demand of coffee is…Suppose the demand for bicycles is given byQp = 10,000P- and the supply of bicycles is given by Qs = 0.01P3. (a) Using calculus and the given supply and demand curves, find mathematical expressions for the elasticities of demand and supply as a function of the price. Use these expressions to demonstrate that both curves have constant elasticity along their entire length. (b) Find the equilibrium price and quantity in this market mathematically.The quantity demanded each month of Russo Espresso Makers is 250 when the unit price is $140. The quantity demanded each month is 1000 when the unit price is $110. The suppliers will market 750 espresso makers when the unit price is $76 or higher. At a unit price of $96, they are willing to market 2250 units. Both the supply and demand equations are known to be linear. (a) Find the demand equation. P = (b) Find the supply equation. p= (c) Find the equilibrium quantity and the equilibrium price. units $
- 3. Garibaldi Provincial Park is located between Squamish and Whistler. A travel cost survey was completed to estimate demand for trips to the park. Bascd on the survey an estimated demand function was derived to represent an average household: P= 200 – 50Q. This is demand per year per household. If there are approximately 2000 households with a travel cost of $150, 3000 households with a travel cost of $100, and 4000 households with a travel cost of $50, what is the total consumer surplus per year from the park?When the U.S. government announced that a domestic mad cow was found in December 2003, analystsestimated that domestic supplies would increase inthe short run by 10.4% as many other countriesbarred U.S. beef. An estimate of the price elasticity of beef demand is (Henderson, 2003).Assuming that only the domestic supply curveshifted, how much would you expect the price tochange? (Hint: See the discussion of price flexibilityin the application “The Big Freeze.”)c. Suppose that Cape Cod Chip Company reduces the price of their 'kettle cooked' potato chips by 50%. Market studies indicate that tater lights compete with premium brand chips like the Cape Cod Co. products. Will this affect the supply of or the demand for the Tater Lights. How would the curve be affected? Supply/Demand (circle one). Direction of adjustment: + d. Illustrate the situation in (c) in the coordinate axis below. P
- Please calculate the total cost of providing a 50% subsidy on purchases of fruit and vegetables at farmers markets by SNAP participants. Assume that you are estimating it for the state of Connecticut with 350,000 SNAP participants. The season for farmers markets and the use of subsidies is 5 months (May-September); subsidies can only be used during this period. Based on prior studies, you know that a typical SNAP participant that attends farmers markets will purchase on average 3 lb of fruit and 2 lb of vegetables per month. Average price for vegetables is $1.5 per lb and the price elasticity of demand for vegetables among SNAP participants is -0.6. Similarly, fruit cost on average $2.5 per lb and the demand elasticity for fruit is -0.8. How much should the state of Connecticut expect to pay in total subsidies each season if only 20% of SNAP participants will attend farmers markets?The elasticity of resource demand is calculated as: % Chage in resource quantjty/% Change in resource price If a calculation of Resource Demand Elasticity returns a quotient that is less than 1, then O Resource demand elasticity is relatively elastic, indicating there is a lack of resource substitutability O Resource demand elasticity is relatively elastic, indicating there is an ease of resource substitutability Resource demand elasticity is relatively inelastic, indicating there is a lack of resource substitutability Resource demand elasticity is relatively inelastic, indicating there is an ease of resource substitutabilityThe quantity demanded x each month of Russo Espresso Makers is 250 when the unit price p is $150; the quantity demanded each month is 1000 when the unit price is $120. The suppliers will market 750 espresso makers if the unit price is $50. At a unit price of $80, they are willing to market 3000 units. Both the demand and supply equations are known to be linear. (a) Find the demand equation.p = (b) Find the supply equation.p = (c) Find the equilibrium quantity and the equilibrium price. equilibrium quantity units equilibrium price $