Neville's passion is fine wine. When the prices of all other goods are fixed at current levels, Neville's demand function for high-quality claret is q = .02m-2p, where m is his income, p is the price of claret (in British pounds), and q is the number of bottles of claret that he demands. Neville's income is 7,500 pounds, and the price of a bottle of suitable claret is 30 pounds. a) How many bottles of claret will Neville buy? b) If the price of claret rose to 40 pounds, how much income would Neville have to have in order to be exactly able to afford the amount of claret and the amount of other goods that he bought before the price change? At this income, and a price of 40 pounds, how many bottles would Neville buy? c) At his original income of 7,500 and a price of 40, how much claret would Neville demand? d) When the price of claret rose from 30 to 40, the number of bottles that Neville demanded decreased by: The substitution effect (increased, reduced) his demand by:bottles and the income effect (increased, reduced) his demand by:

Neville's passion is fine wine. When the prices of all other goods are fixed at current levels, Neville's demand function for high-quality claret is q = .02m-2p, where m is his income, p is the price of claret (in British pounds), and q is the number of bottles of claret that he demands. Neville's income is 7,500 pounds, and the price of a bottle of suitable claret is 30 pounds. a) How many bottles of claret will Neville buy? b) If the price of claret rose to 40 pounds, how much income would Neville have to have in order to be exactly able to afford the amount of claret and the amount of other goods that he bought before the price change? At this income, and a price of 40 pounds, how many bottles would Neville buy? c) At his original income of 7,500 and a price of 40, how much claret would Neville demand? d) When the price of claret rose from 30 to 40, the number of bottles that Neville demanded decreased by: The substitution effect (increased, reduced) his demand by:bottles and the income effect (increased, reduced) his demand by:

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: The demand for meals at a local Applebee's will shift to the left if: O the price of gasoline falls…

A: Correct : the Olive Garden, Applebee's competitor, offers a 10 percent discount coupon in the local…

Q: Let's say that the demand side of the market for Blue Soda is comprised of 3 leading…

A: There are three leading agents Anthony, Brad, Claire.P is the price of 1 litre of Blue Soda and the…

Q: Coffee and cream are complements. If the price of coffee increases, this will cause: a) a decrease…

A: Answer: Correct option: C ( an upward movement (decrease in quantity demanded) along the demand…

Q: The demand and supply of muffins in a small town are shown in the graph below. A great review of the…

A: Demand curve is there downward sloping curve. Supply curve is the upward sloping curve.…

Q: the market for PlayStation 4s. ppose household income decreases. e the line drawing tool to show how…

A: There are various kinds of goods in economics that is, Club good Public good Private good Capital…

Q: Consider the demand for shrimp shown in Figure 2. Suppose the current demand for shrimp is D (in…

A: A leftward shift in the demand curve would cause the price to remain the same but equilibrium…

Q: Suppose the market demand curve for pizza can be expressed as QD = 100 - 2P + 3Pb, where QD is the…

A: Demand curve shows the relationship between price and quantity demanded. It is derived from the…

Q: The price of a widget decreases from $1 to $0.60, and in response to the price change the quantity…

A: The demand for the goods comes from the consumers, individuals, households, and other entities in…

Q: Suppose when a person’s income increases, his or her demand for mac and cheese decreases. What is…

A: There exists a positive relation between income of a consumer and demand for normal good. There…

Q: Consider the demand for shrimp shown in Figure 2. Suppose the current demand for shrimp is D (in…

A: Demand curve: - demand curve is the graphical way of showing the relationship between the quantity…

Q: What term is used to describe goods that can replace each other to some extent, so that a rise in…

A: Substitute goods: 2 goods X and Y are substitutes if price of good X and demand for good Y are…

Q: If the demand curve for product A shifts to the right. This might be caused by: Multiple Choice a…

A: The demand curve is the downward-sloping curve. The supply curve is the upward-sloping curve. The…

Q: he following graph shows Musashi's weekly demand for cheesecake, represented by the blue line. Point…

A: A market is a place where the buyers and sellers interact with each other and the exchange of goods…

Q: GrubHub, a food delivery service, has recently expanded to your area. The accompanying table…

A: Demand is a consumer's desire and ability to purchase goods and services that they are willing to…

Q: Suppose that when the average family income falls from $40,000 per year to $30,000 per year, the…

A: Ans. The Income elasticity of demand measures the responsiveness of change in demand for a good with…

Q: When other things remain unchanged, what can be expected if Blue-ray movies become significantly…

A: when the demand is more in the market price will be less so here we can choose the correct option…

Q: Which one is the profit maximizing quantity and which one is the profit maximizing price? And how…

A: Profit = Total Revenue - Total Cost Total Revenue = Price*Quantity Demand Function : Q = 9006 - 158P…

Q: Tom had an "absolute need" for web help and therefore was ready to "pay anything" to get it. If this…

A: Tom has an absolute need for web help and is willing to pay any price for it.But demand is not just…

Q: The table below provides price and output information for Angela's weekly demand curve for…

A: Price Elasticity of Demand (PED) is a measure used to quantify the responsiveness of the quantity…

Q: The demand curve for pistachios is: P = 53-0.50. Suppose that a new study shows that eating…

A: A basic idea in economics, demand is the amount of an item or service that buyers are willing and…

Q: The following table shows two demand schedules for a given style of men's shoe-that is, how many…

Q: described by the inverse demand function p = 10 - 3q and the supply of the good is given by the…

A: Equilibrium is achieved at the output level where quantity supplied equals quantity demanded.

Q: What can cause the market demand curve for oatmeal to shift leftward (a decrease in demand)? An…

A: What can cause the market demand curve for oatmeal to shift leftward (a decrease in demand)?

Q: ON 9 9. Imagine a small bakery that produces two types of bread: Whole Wheat Bread (Good A) and…

A: Demand:Demand is the desire of an individual ability and willingness to pay for a product. The…

Q: Barron used to make $2,500 a month and eat sushi three times per month. Now he is making $3,500 a…

A: We know that, Income elasticity would be ratio of percentage change in quantity demanded to…

Q: Q.2.2 Butter and margarine are substitutes in consumption. Explain how a decrease in the price of…

A: The goods which can be used in place of each other to satisfy a want are substitute goods and the…

Q: The demand function for potatoes per month is given by Q = 104 – 40p + 20pt + 0.01Y, where Q = the…

A: The demand function depicts the relationship between the quantity demanded, the price, and other…

Q: Imagine your income increases and you find that you buy more coffee. What is true about your income…

A: Income elasticity of demand is used to check the relationship between a change in quantity demanded…

Q: The demand for organic carrot is given by the following equation Q0 = 75-5P + Pc + 21 where Po is…

A: The objective of the question is to understand the demand function of organic carrots and how it is…

Question

4) Neville's passion is fine wine. When the prices of all other goods are fixed at current levels,
Neville's demand function for high-quality claret is q = .02m-2p, where m is his income, p
is the price of claret (in British pounds), and q is the number of bottles of claret that he
demands. Neville's income is 7,500 pounds, and the price of a bottle of suitable claret is 30
pounds.
a) How many bottles of claret will Neville buy?
b)
If the price of claret rose to 40 pounds, how much income would Neville have to have in
order to be exactly able to afford the amount of claret and the amount of other goods
that he bought before the price change? At this income, and a price of 40 pounds, how
many bottles would Neville buy?
c)
At his original income of 7,500 and a price of 40, how much claret would Neville
demand?
d) When the price of claret rose from 30 to 40, the number of bottles that Neville
demanded decreased by: The substitution effect (increased, reduced) his demand
by:bottles and the income effect (increased, reduced) his demand by:
4

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1: Define quantity demanded and demand:

VIEW

Step 2: Calculate optimum quantity:

VIEW

Step 3: Calculate changes in income to changes in price:

VIEW

Step 4: Calculate the change in quantity when price changes:

VIEW

Step 5: Calculate SE and IE:

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 6 steps with 10 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

The following graph plots the demand curve (blue line) for several consumers in the market for VR headsets in Mead, a small town located in Colorado. The Mead market price of a VR headset is given by the horizontal black line at $180. Each rectangle you can place on the following graph corresponds to a particular buyer in this market: orange (square symbols) for Jacques, green (triangle symbols) for Kyoko, purple (diamond symbols) for Musashi, tan (dash symbols) for Rina, and blue (circle symbols) for Sean. Use the rectangles to shade the areas representing consumer surplus for each person who is willing and able to purchase a VR headset at a market price of $180. (Note: If a person will not purchase a VR headset at the market price, indicate this by leaving his or her rectangle in its original position on the palette.) PRICE (Dollars per VR headset) 480 420 360 300 240 180 120 60 0 0 1 Jacques 2 Kyoko Musashi Rina Sean 3 4 5 QUANTITY (VR headsets) Market Price 6 7 8 Based on the…
When the price of a good increased by 2%, the quantity demanded of it decrease 10% does this have close substitutes or poor substitutes? Is this good more likely to be a necessity or a luxury, and to be nearly or broadly defined
Sprite and cola are production substitutes. Use two separate well_labeled diagrams to show the effect of an increase in demand for sprite on the equillibrium price and quantity of sprite in the sprite market and also the equillibrium price and quantity of cola in the cola market.
Consider two markets: the market for waffles and the market for pancakes. The initial equilibrium for both markets is the same, the equilibrium price is $6.50, and the equilibrium quantity is 35.0. When the price is $9.75, the quantity supplied of waffles is 57.0 and the quantity supplied of pancakes is 101.0. For simplicity of analysis, the demand for both goods is the same. Using the midpoint formula, calculate the elasticity of supply for pancakes. Please round to two decimal places. Supply in the market for waffles is
Julian is interested in only two goods: good X and good Y and has M dollars to spend (and always spends it all). His uncle Paul is rich and he offered him 1000 dollars as a present but Julian did not take it and chose to just spend his own money. Julian's demand function for good X and the demand function for good Y are given respectively by XJ = 32800/(10Px + Py) and Y₁ = 3280/(10Px + Py). What is Julian's spending money "M"?
if there is any diagram can you add it. Given the following demand and supply equations: QD = 10 - 0.8P + 5Y + A QS = -10 + P where Q = quantity (million units per month), P = price (€ per unit). Y = average monthly income (€000) and A monthly advertising expenditure (€000). Suppose average monthly income is €4,000 and monthly advertising expenditure is €50,000: (a) Find the market equilibrium price and quantity. (b) Find total welfare when the market is in equilibrium. (c) Find the price elasticity and income elasticities of demand and price elasticity of supply at equilibrium. Interpret your results. (d) What would be the effect of a price ceiling of €60? Explain. (e) Suppose a tax of €8 per unit is introduced: (i) What is the effect on market price and quantity? Explain. (ii) What is the impact of the tax on total welfare? Explain. (iii) How is the incidence of the tax shared between the consumer and the supplier? Explain
Consider the demand for shrimp shown in Figure 2. Suppose the current demand for shrimp is D (in black), the current price of a pound of shrimp is $10, and the current quantity demand for shrimp is 200K. Which of the following correctly describes the effect of a decrease in the price of a pound of shrimp? A) The price of a pound of shrimp falls to $3, the demand curve shifts left to D'' (red), and the quantity demand for shrimp remains at 200K pounds. B) The price of a pound of shrimp falls to $3, the demand curve remains at D (black), and the quantity demand for shrimp decreases to 150K pounds. C) The price of a pound of shrimp falls to $3, the demand curve shifts right to D' (blue), and the quantity demand for shrimp increases to 270K pounds. D) The price of a pound of shrimp falls to $3, the demand curve remains at D (black), and the quantity demand for shrimp increases to 270K.
Suppose that the market for porcelain lupines in Freedonia is perfectly competitive and initially in a long nun equilibrium. Porcelain lupines are normal goods in Freedonia and are produced with a computer aided technology. Porcelain lupines and ceramic roses are substitutes while porcelain lupines and glass vases are complements. Suppose that a government report shows that people who possess ceramic roses are 72.74% more likely to suffer from erectile dysfunction. Describe with the use of diagrams the effects of this report upon the market for porcelain lupines in the short run and in the long run.
Based on Nick's willingness to sell, plot his supply curve as a step function on the following graph using the orange points (square symbol). Be sure to plot your first point at (0, 0). Price of Water 10 9 100 8 7 8 10 3 2 1 0 0 2 3 Quantity of Water Suppose the price of a bottle of water is $4. In this case, Nick receives $ 5 If the price rises to $6, Nick now sells Nick's Supply Price = $4 Use the black line (plus symbol) to draw a price line at $4. Next use the grey point (star symbol) to indicate how many bottles of water Nick will produce and sell at that price. Finally, use the purple point (diamond symbol) to shade the area that represents Nick's producer surplus. bottles of water. This Quantity Sold Producer Surplus in producer surplus from his water sales. his producer surplus to $
When the price of a certain product was considered to be "low", consumers spent $5 million monthly on it. After the price doubled, the total consumer expenditures increased to $7 million. Recently you read that this means that the demand curve for this product is upward sloping. Do you agree? Explain.
The following table shows two demand schedules for a given style of men's shoe-that is, how many pairs per month will be demanded at various prices at Stromnord, a men's clothing store. $ Price $75 70 65 60 55 $ D1 Quantity Demanded 53 60 68 77 87 Suppose that Stromnord has exactly 65 pairs of this style of shoe in inventory at the start of the month of July and will not receive any more pairs of this style until at least August 1. Instructions: Enter your answers as a whole number. a. If demand is D₁, what is the lowest price that Stromnord can charge so that it will not run out of this model of shoe in the month of July? What if demand is D2? D2 Quantity Demanded 13. 15 18 22 27 b. If the price of shoes is set at $75 for both July and August and demand will be D2 in July and D₁ in August, how many pairs of shoes should Stromnord order if it wants to end the month of August with exactly zero pairs of shoes in its inventory? pair(s) How many pairs of shoes should it order if the price…
Consider the market demand for compact cars. Complete the following table by indicating whether an event will cause a movement along the demand curve for compact cars or a shift of the demand curve for compact cars, holding all else constant. Event A decrease in the price of gasoline (a complement for compact cars) A decrease in the price of compact cars A decrease in the number of consumers Movement Along Shift O O