PROBLEM (4) The demand for private jets (x) is given by QD= 20 - P+Py where px is the price of jets, py is the price of yachts and I is the average income level. (a) Is a jet a normal or inferior good? Are yachts and jets substitutes or complements ?(explain your reasoning in a sentence) At the point I = px = py=10 calculate (b) the (own) price elasticity of demand (c) the cross price elasticity of demand (demand for jets with respect to the price of yachts) (d) the income elasticity of demand (Calculus help: the derivative ofis - ) X

PROBLEM (4) The demand for private jets (x) is given by QD= 20 - P+Py where px is the price of jets, py is the price of yachts and I is the average income level. (a) Is a jet a normal or inferior good? Are yachts and jets substitutes or complements ?(explain your reasoning in a sentence) At the point I = px = py=10 calculate (b) the (own) price elasticity of demand (c) the cross price elasticity of demand (demand for jets with respect to the price of yachts) (d) the income elasticity of demand (Calculus help: the derivative ofis - ) X

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter6: Consumer Choice And Demand

Section: Chapter Questions

Problem 6QFR

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Exercise 1. The demand for your product X has been estimated to be QX = 7, 880 − 4PX − 2PY + PZ − 0.1M where Y and Z are other (related) products. The relevant price and income data are asfollows: PX = 10, PY = 15, PZ = 50, M = 40, 000 b. Is X an inferior or a normal good? d. Graph the demand curve for X given the above information.e. How will the demand curve change if M falls to 35, 000? Is that in line with b.?
If X has many close substitutes, there will be large substitution effects (what will theindifference curves look like?). -The demand curve is likely to be flat, with a small increase in price leading to a large decrease in demand.For a normal good, the IE reinforces the SE, causing demand to be flatter. -For an inferiorgood, the IE dampens the SE, leading to a steeper demand curve. Can someone graph the Demand curve for a normal good and an inferior I'm having a hard time visualizing this. Thanks Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
2. Dan and Georgie share a trail behind their homes that leads to the beach. It's easier to go to the beach if the trail is kept maintained. Dan only goes to the beach infrequently, while Georgie loves to surf and kayak. Dan's demand for time spent maintaining the trail to the beach is P = 10-2Q. Georgie's demand for time spent maintaining the trail is P=16-Q Assume that time spent maintaining the trail is a public good and both Dan and Georgie value time spent maintaining the trail at $14/hour. a. How much time would Dan spend maintaining the trail on their own? How much time would Georgie spend cleaning up on her own? b. What is Dan and Georgie's combined demand curve for hours of time per week spent maintaining the trail? What is the efficient number of hours spent maintaining the trail per week? c. Explain why it may be hard for Dan and Georgie to reach the efficient outcome.
a) A consumer has a utility function given by U = x025 y0.75 He has an income of £100, the price of good x is £5 and the price of good y is £10. How much of the 2 goods x and y does the consumer buy? Take a picture of your workings and upload with your answer, or type out your workings. b) For the utility function above, what is the cross-price elasticity of demand for good x with respect to the price of good y? Take a picture of your workings and upload with your answer, or type out your workings. c) For the utility function above, what is the elasticity of demand of good x with respect to its own price? Take a picture of your workings and upload with your answer, or type out your workings.
8.4 (0) Maude spends all of her income on delphiniums and hollyhocks. She thinks that delphiniums and hollyhocks are perfect substitutes; one delphinium is just as good as one hollyhock. Delphiniums cost $4 a unit and hollyhocks cost $5 a unit. (a) If the price of delphiniums decreases to $3 a unit, will Maude buy more of them? due to the income effect and what part is due to the substitution effect? What part of the change in consumption is (b) If the prices of delphiniums and hollyhocks are respectively Pa = 84 and P, = $5 and if Maude has $120 to spend, draw her budget line in blue ink. Draw the highest indifference curve that she can attain in red ink, and label the point that she chooses as A. Delphiniums 40 30 20 10 30 Hollyhocks 10 20 40 (c) Now let the price of hollyhocks fall to 83 a unit, while the price of delphiniums does not change. Draw her new budget line in black ink. Draw the highest indifference curve that she can now reach with red ink. Label the point she chooses…
icroeconomics-20202 section(2,3 &5)Dr. Abdulhadi Ibrahim / midterm exam Section 2,3 and 5( Dr. Abdulhadi) Suppose that an increase in the price of X goods, leads to a decrease in the demand of good Y This would mean that X and Y are: Select one: O a. normal goods. Ob. None of the answers are correct Oc. substitute goods O d. complementary goods ELASTICITY AND ITS APPLICATION [Autosaved] Jump to... Chapter 6 THE COST OF PRODUC A 4) G D ENG
Explain / Define the terms? a) Marginal utility b) Price c) Supply
(c) When the price of CCC increases from $1 to $8, calculate Maya’s substitution effect and income effect. (d) According to your calculation in part (c), is CCC a normal good or an inferior good? Explain. Is CCC an ordinary good or a Giffen good? Explain.
Question 4 In class, we dicussed that if c and c' are normal goods, then the income effect for these two goods will be positive. Now, consider c now is an inferior good, show with 2 separate diagrams, how the optimal c and c' will change if i) there is an increase in lifetime income, and ii) if there is an increase in the interest rate r.
Suppose a 4 percent increase in income results in a 2 percent decrease in the quantity demanded of a good determine what type of good it is ?
State whether the following statements are TRUE or FALSE and explain your answer (d) Income elasticity of demand (E,) is a measure of the degree of responsiveness of changes in the quantity demanded of goods to a change in its price. (e) If the value of income elasticity of demand for goods is negative(E, <0), the quantity demanded will decrease when income increases. Therefore, the goods is an essential goods. (f)Microeconomics is the branch of economics that analyses the behaviour of how national economies work. (g) Economics is the study of how evenly goods and services are distributed within society (h) Inflationary gap is defined as a situation when real aggregated supply is less that the aggregate supply for employment. (i) When the supply is elastic, the supply curve has a steep slope. Recovery phase of the business cycle is when real GDP reaches its minimum after rising.
1) Suppose the consumer begins in equilibrium at eo. If there is an increase in income and good X is a normal good, illustrate the effect on the demand curve for X. (Note: The same sort of question could be asked for effect of a change in consumer tastes or a change in the price of another good upon which demand for good X depends.) Yo Px PXo eo Xo Xo U₁ U₁ Qx X