2. The graph below shows the demand and supply of baseball caps with inflexible prices.Suppose that 100 baseball caps is the optimal and most profitable level of production forthe firm.Price(S)2010 150BaseballA. Determine the equilibrium price and quantity at the medium level of demand (DM)B. Determine the equilibrium price and quantity if there is a demand shock thatunexpectedly lowers demand (DL).C. Determine the equilibrium price and quantity if there is a demand shock thatunexpectedly increases demand (DH).D. What can you conclude will happen to prices and output when this model is shocked bychanges in demand?

Equilibrium price and quantity are determined when supply and demand are equal. A. When the…

Answered: 2. The graph below shows the demand and…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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1. If a decrease in income results in a decrease in quantity demanded of a good, then for that good the: cross-price elasticity of demand is negative. price elasticity of demand is negative. income elasticity of demand is negative. income elasticity of demand is positive.
1.4 If the price is set at R10, the market will A. experience a surplus (excess supply) of 50. B. experience a surplus (excess supply) of 40. C. experience a shortage (excess demand) of 40. D. experience a shortage (excess demand) of 10. E. still be in equilibrium. 1.5 If the price elasticity of demand is 1.6 and a firm increases the price of its product by 10%, it would expect its total revenue to A. decrease by 16%. B. increase by 16%. C. increase by 6%. D. remain constant. E. decrease by 6%. 1.6 Nash equilibrium can be defined as the competitive outcome where A. all firms set prices equal to average cost and all firms make economic profit. B. each firm sets a price equal to marginal cost and each firm makes economic profit. C. each firm sets a price higher than marginal cost and each firm makes economic profit. D. each firm sets a price lower than marginal cost and each firm makes economic profit. E. firms set a price lower than average cost and all firms make economic profit. 1.7…
. ______________ is the willingness to buy a product and the ability to pay for it. Select one: a.Demand b.Quantity c.The Law of Demand d.Elasticity
None
On the demand curve for flowers below, please answer the following questions Price per unit (dollars) 10 8 6 20 25 30 Demand Quantity a. What do the points along the curve represent? b. Calculate the Elasticity of Demand between point b and c. c. What is the curve elastic, unitary elastic or inelastic? d. What does that type of elasticity mean for the florist?
3. The following table gives the supply schedule for Purcell Ltd, a UK based rug producer. Price (£) Quantity Supplied (Qs) 10 0 20 15 30 21 40 28 (i) What does the price elasticity of supply (PES) measure? (ii) How is it calculated? Write down the full formulae. (iii) Assume that the current price is £20. Calculate the price elasticity of supply if the price increases to £30 (show all your calculations). (iv) Is supply elastic, unit-elastic, or inelastic? Explain why. (v) What would the slope of the supply curve look like? (Hint: Relatively flat or steep supply curve) Based on your calculation and your analysis, draw the supply curve for Purcell Ltd. (vi) Would you expect the PES of rugs to be different in the short term and the long term? Explain your answer in detail.
9. When the demand curve shifts, the change in equilibrium price will be larger the moreelastic the supply curve.(a) True(b) False
Iran has threatened to close the Straits ot Hormuz, a narrow passageway that connects the Persian Gulf and the Indian Ocean. As a result, gas prices have increased. What is the effect on grocery prices in general? What Will be the fifth on demand and supply of gas in Texas? 1. what has happened to his concern you as an economist?
question 7 plesae
Point on Demand Curve: A B C D E F G H I Price (P): $40 $35 $30 $25 $20 $15 $10 $5 $0 Quantity Demanded (QD): 0 5 10 15 20 25 30 35 40 b) Calculate the price elasticity of demand between each set of points on the demand curve (i.e., between A and B, B and C, C and D, D and E, etc.) (c) explain how and why the price elasticity of demand changes as you move along this demand curve. how and why the effect of price changes on total revenue is tied to elasticity.
Midpoint Formula for Percentage Change in Quantity: Joe, we need to crunch some numbers. Recall the midpoint formula... ((New Quantity – Old Quantity) / ((New Quantity + Old Quantity) /2)) z. Midpoint Formula for Percentage Change in Price: ((New Price- Old Price)/((New Price+ Old Price) /2)) x100 Curious Cally Connecting U dropped its price from $20 to $16 per gigabyte of data. Joe, according to the midpoint formula, Connecting U reduced its price by what percentage? Curious Cally Connecting U dropped the price for a gigabyte of data by 18.52 рercent. Connecting U dropped the price for a gigabyte of data by 20 percent. Connecting U dropped the price for a gigabyte of data by 22.2 percent. Submit MacBook Air F9 F8 F7 F6
13. The table below gives part of the supply schedule for personal computers in the United States. Price Quantity Supplied before tech change Quantity Supplied after tech $1,100 $900 12,000 8,000 change 13,000 9,000 a) Calculate the price elasticity of supply when price rises from $900 to $1,100 using the arc elasticity formula (the midpoint method). b) Now suppose that technology changes such that at every price, 1000 more computers are supplied. Now, as prices rise from $900 to $1,100, is the elasticity of supply smaller than, larger than, or equal to the elasticity in part a)? c) Does the change in b) change the slope of the supply curve? Are slope and elasticity the same thing? Explain.

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