The average price of a home in W County rose more than 12% last year but the number of sales fell nearly 15%. Its the old law of supply and demand, said a spokesman for the Board of Realtors. The number of sales is down because there's a higher demand for properties but there isn't a corresponding number to sell. Draw a diagram to illustrate the case of a shift in demand and/or supply curves that is consistent with

The average price of a home in W County rose more than 12% last year but the number of sales fell nearly 15%. Its the old law of supply and demand, said a spokesman for the Board of Realtors. The number of sales is down because there's a higher demand for properties but there isn't a corresponding number to sell. Draw a diagram to illustrate the case of a shift in demand and/or supply curves that is consistent with

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter5: Elastic And Its Application

Section: Chapter Questions

Problem 3PA: Suppose the price elasticity of demand for heating oil is 02. in the short run and 0.7 in the long...

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Similar questions

Can you think of an industry (or product) with near infinite elasticity of supply in the short term? That is, what is an industry that could increase Qs almost without limit in response to an increase in the price?
The equation for a demand curve is P=2/Q. What is the elasticity of demand as price falls from 5 to 4? What is the elasticity of demand as the price falls from 9 to 8? Would you expect these answers to be the same?
The Stopdecay Company sells an electric toothbrush for $25. Its sales have averaged 8,000 units per month over the past year. Recently, its closest competitor, Decayfigh ter, reduced the price of its electric toothbrush from $35 to $30. As a result, Stopde cays sales declined by 1,500 units per month. What is the arc cross elasticity of demand between Stopdecays toothbrush and Decayfighters toothbrush? What does this indicate about the relationship between the two products? If Stopdecay knows that the arc price elasticity of demand for its toothbrush is 1.5, what price would Stopdecay have to charge to sell the same number of units as it did before the Decayfighter price cut? Assume that Decayfighter holds the price of its toothbrush constant at $30. What is Stopdecays average monthly total revenue from the sale of electric toothbrushes before and after the price change determined in part (b)? Is the result in part (c) necessarily desirable? What other factors would have to be taken into consideration?
Suppose you could buy shoes one at a time, miter than in pain. What do you predict the cross-price elasticity for left shoes and right shoes would be?
The equation for a supply curve is 4P=Q. What is the elasticity of supply as price rises from 3 to 4? What is the elasticity of supply as the price rises from 7 to 8? Would you expect these answers to be the same?
How does one analyze a market where both demand and supply shift?
According to the previous discussion, what factors influence the price elasticity of demand for cigarettes? What other factors not mentioned in the article might influence the price elasticity of demand for cigarettes?
Would you expect supply to play a more significant role in determining the price of a basic necessity like food or a luxury like perfume? Explain. Hint: Think about how the price elasticity of demand will differ between necessities and luxuries.
Would you usually expect elasticity of demand or supply to be higher in the short run or in the long run? Why?
Define the price elasticity of supply. Explain why the price elasticity of supply might be different in the long run than in the short run.
The equation for a supply curve is P=3Q8. What is the elasticity in moving from a price of 4 to a price of 7?
Explain why using the midpoint formula for calculating the elasticity of demand gives the same result whether price increases or decreases, but using the initial price and quantity instead of the average does not.