(Figure 4.13) What caused the budget constraint to rotate? A. an increase in the price of good Y B. a decrease in income OC. an increase in the price of good X OD. a decrease in the price of good Y
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- If a 10 decrease in the price of one product that you buy causes an 8 increase in quantity demanded of that product, will another 10 decrease in the price cause another 3 increase (no more and no less) in quantity demanded?Economists define normal goods as having a positive income elasticity. We can divide normal goods into two types: Those whose income elasticity is less than one and those whose income elasticity is greater than one. Think about products that would fall into each category. Can you come up with a name for each category?a) List FOUR main determinants of Income elasticity of demandb) The following relate to a consumer in a certain market:Income (Ksh) Price of X (Ksh) Demand for X Demand for Y5,000 15 30 1006,000 21 35 1208,000 30 40 150Required:Calculate the cross elasticity of demand as the price of X changes from Ksh. 15 to Ksh21 and interpret.QUESTION TWOIvy, a General Manager at Mumias Sugar Company, estimated a multiplicative demandfunction of the form: ?? = ???? ??1?0?0 using a cross-section data collected in thecompany sales on 30th June, 2016. The estimation results are as follows:Constant Price (P) Income (I) Price of Other Good (P0)Estimated coefficient 0.022 -0.223 1.354 0.133Standard Error 0.012 0.056 0.502 0.814t-statistic (1.19) (-3.98) -2.69 -0.13Number of Observations, n = 210; R-squared = 0.7516Critical Students' t = 1.96 at 5% Level of Significance2a) How would the coefficients and ?2 value be interpreted?b) What will the quantity demanded be if the values of the independent variables…
- ½ 1.CQLPrecalc.2 The monthly supply S(p) and demand D(p) for a video game console is given by the graphs. Complete parts a-e below. Quantity, q S(p) = D(p) = (Type expressions using p as the variable.) 5000- 4500- 4000- 3500- 3000- 2500 2000-€ 1500- 1000- 500-S(p) 0+ 0 (p) 200 400 600 800 1000 Selling price per unit, p a) Describe how the increased selling price of an item affects the consumer demand and producer supply. If the selling price of an item is higher than it should be, the consumer demand for the item will decrease and the producer's willingness to supply it will increase. b) Find formulas for the functions q = D(p) and q = S(p).1. Define utility, Marginal utility explain the law of diminishing marginal utility with the help of graph. Also explain its assumption2. Define price elasticity of demand how we calculate price elasticity of demand what are the categories of price elasticity of demand explain with formula and graph 3. Define and Explain and draw on graph1. total cost2. total variable cost3. total fixed cost4. marginal cost5. average fixed cost 6. average variable cost7. average total cost5. Which of the following will have an inward parallel shift of the budget constraint? A. Increase in income. B. Increase in the price of one good. C. Decrease in the price of one good. D. Decrease in income. 6. The percentage change in the quantity demanded of one good, divided by the percentage change in price of another good, is called: A. Price elasticity of demand B. Cross elasticity of supply C. Cross elasticity of demand D. Income elasticity of demand 7. Which of the following statements about a normal good is false: A. Its income elasticity must be greater than 1. B. Its cross elasticity of demand can be positive. C. Its income elasticity can be 0.5 D. Its cross elasticity of demand can be negative.
- 4. Describe what is meant by a normal good. Provide a real-life example in your own words. What is an inferior good? How does a change in income impact the demand for inferior goods?Title If the cross elasticity of demand between two goods is negative, then the two goods are: (a) normal... Description If the cross elasticity of demand between two goods is negative, then the two goods are: (a) normal goods (b) unrelated goods (c) complements (d) substitutes (e) inferior goods.9 A positive cross-elasticity of demand for two products indicates that they are: Multiple Choice O O substitutes complements independent goods. normal goods
- i FS 16 1/2 Problem 1 The demand for good x is given by 100% 10 Research shows that the prices of related goods are given by Py56,500 and P2 $100, while the average income of individuals consuming this product is M-$70,000. a. Indicate whether goods Y and Z are substitutes or complements for good X, b. Is X an inferior or a n a normal good? How many units of good X will be purchased when Px-55,230? d. Determine the demand function and inverse demand function for good X. Graph the demand curve for good X. F6 EC650 Managerial Economics Module 2 Homework Problem 2 Use the accompanying graph to answer these questions. A 0=6,000- a. Suppose demand is D and supply is S. If a price ceiling of $6 is imposed, what are the resulting shortage and full economic price? b. Suppose demand is D and supply is S. If a price support of $12 is imposed, what is the resulting surplus? What is the cost to the government of purchasing any and all unsold units? c. Suppose demand is D and supply is Sº so that…5. Which of the following will have an inward parallel shift of the budget constraint?A. Increase in income.B. Increase in the price of one good.C. Decrease in the price of one good.D. Decrease in income.6. The percentage change in the quantity demanded of one good, divided by the percentage change inprice of another good, is called:A. Price elasticity of demandB. Cross elasticity of supplyC. Cross elasticity of demandD. Income elasticity of demand 7. Which of the following statements about a normal good is false:A. Its income elasticity must be greater than 1.B. Its cross elasticity of demand can be positive.C. Its income elasticity can be 0.5D. Its cross elasticity of demand can be negative.↑ Use the information in the table below to compute Susan's income elasticity of demand for business magazines. Business Magazines Demanded per Month OA 0.113 OB. 1.216 OC. 7.250 OD. 0.138 COE. 8813 Month 1 2 6 Income per Month $3525 $3725
