Describe the mechanism by which supply creates its o’si1 demand .

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Answer 1

Textbook Question

Chapter 11, Problem 1SCQ

Describe the mechanism by which supply creates its o’si1 demand.

Expert Solution & Answer

To determine

Mechanism by which supply creates its own demand.

Explanation of Solution

It is based on criteria that someone’s expenditure is another person’s income. Supply of goods requires combination of inputs which are used for production of goods and services. These inputs are called factor of production. These are Land, Labor, capital, entrepreneurship. Combination of factor inputs produces goods, which is considered as production activity. Firms or producers supply goods to the consumers who are demanders of goods. As income is earned by these factor inputs in the form of wages, profits, interest etc. They use such income for demand of another goods and services.

So, supply of goods creates income which is used to demand other goods and services in an economy.

Economics Concept Introduction

Say’s Law states that” Supply creates its own demand”.

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Problem 3 You are given the following demand for European luxury automobiles: Q=1,000 P-0.5.2/1.6 where P-Price of European luxury cars PA = Price of American luxury cars P, Price of Japanese luxury cars I= Annual income of car buyers Assume that each of the coefficients is statistically significant (i.e., that they passed the t-test). On the basis of the information given, answer the following questions 1. Comment on the degree of substitutability between European and American luxury cars and between European and Japanese luxury cars. Explain some possible reasons for the results in the equation. 2. Comment on the coefficient for the income variable. Is this result what you would expect? Explain. 3. Comment on the coefficient of the European car price variable. Is that what you would expect? Explain.

Problem 2: A manufacturer of computer workstations gathered average monthly sales figures from its 56 branch offices and dealerships across the country and estimated the following demand for its product: Q=+15,000-2.80P+150A+0.3P+0.35Pm+0.2Pc (5,234) (1.29) (175) (0.12) (0.17) (0.13) R²=0.68 SER 786 F=21.25 The variables and their assumed values are P = Price of basic model = 7,000 Q==Quantity A = Advertising expenditures (in thousands) = 52 P = Average price of a personal computer = 4,000 P. Average price of a minicomputer = 15,000 Pe Average price of a leading competitor's workstation = 8,000 1. Compute the elasticities for each variable. On this basis, discuss the relative impact that each variable has on the demand. What implications do these results have for the firm's marketing and pricing policies? 2. Conduct a t-test for the statistical significance of each variable. In each case, state whether a one-tail or two-tail test is required. What difference, if any, does it make to…

You are the manager of a large automobile dealership who wants to learn more about the effective- ness of various discounts offered to customers over the past 14 months. Following are the average negotiated prices for each month and the quantities sold of a basic model (adjusted for various options) over this period of time. 1. Graph this information on a scatter plot. Estimate the demand equation. What do the regression results indicate about the desirability of discounting the price? Explain. Month Price Quantity Jan. 12,500 15 Feb. 12,200 17 Mar. 11,900 16 Apr. 12,000 18 May 11,800 20 June 12,500 18 July 11,700 22 Aug. 12,100 15 Sept. 11,400 22 Oct. 11,400 25 Nov. 11,200 24 Dec. 11,000 30 Jan. 10,800 25 Feb. 10,000 28 2. What other factors besides price might be included in this equation? Do you foresee any difficulty in obtaining these additional data or incorporating them in the regression analysis?

Answer 2

Textbook Question

Chapter 11, Problem 1SCQ

Describe the mechanism by which supply creates its o’si1 demand.

Expert Solution & Answer

To determine

Mechanism by which supply creates its own demand.

Explanation of Solution

It is based on criteria that someone’s expenditure is another person’s income. Supply of goods requires combination of inputs which are used for production of goods and services. These inputs are called factor of production. These are Land, Labor, capital, entrepreneurship. Combination of factor inputs produces goods, which is considered as production activity. Firms or producers supply goods to the consumers who are demanders of goods. As income is earned by these factor inputs in the form of wages, profits, interest etc. They use such income for demand of another goods and services.

So, supply of goods creates income which is used to demand other goods and services in an economy.

Economics Concept Introduction

Say’s Law states that” Supply creates its own demand”.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Textbook Question

Chapter 11, Problem 1SCQ

Describe the mechanism by which supply creates its o’si1 demand.

Expert Solution & Answer

To determine

Mechanism by which supply creates its own demand.

Explanation of Solution

It is based on criteria that someone’s expenditure is another person’s income. Supply of goods requires combination of inputs which are used for production of goods and services. These inputs are called factor of production. These are Land, Labor, capital, entrepreneurship. Combination of factor inputs produces goods, which is considered as production activity. Firms or producers supply goods to the consumers who are demanders of goods. As income is earned by these factor inputs in the form of wages, profits, interest etc. They use such income for demand of another goods and services.

So, supply of goods creates income which is used to demand other goods and services in an economy.

Economics Concept Introduction

Say’s Law states that” Supply creates its own demand”.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Textbook Question

Chapter 11, Problem 1SCQ

Describe the mechanism by which supply creates its o’si1 demand.

Expert Solution & Answer

To determine

Mechanism by which supply creates its own demand.

Explanation of Solution

It is based on criteria that someone’s expenditure is another person’s income. Supply of goods requires combination of inputs which are used for production of goods and services. These inputs are called factor of production. These are Land, Labor, capital, entrepreneurship. Combination of factor inputs produces goods, which is considered as production activity. Firms or producers supply goods to the consumers who are demanders of goods. As income is earned by these factor inputs in the form of wages, profits, interest etc. They use such income for demand of another goods and services.

So, supply of goods creates income which is used to demand other goods and services in an economy.

Economics Concept Introduction

Say’s Law states that” Supply creates its own demand”.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Textbook Question

Answer 6

Textbook Question

Answer 7

Expert Solution & Answer

To determine

Mechanism by which supply creates its own demand.

Explanation of Solution

It is based on criteria that someone’s expenditure is another person’s income. Supply of goods requires combination of inputs which are used for production of goods and services. These inputs are called factor of production. These are Land, Labor, capital, entrepreneurship. Combination of factor inputs produces goods, which is considered as production activity. Firms or producers supply goods to the consumers who are demanders of goods. As income is earned by these factor inputs in the form of wages, profits, interest etc. They use such income for demand of another goods and services.

So, supply of goods creates income which is used to demand other goods and services in an economy.

Economics Concept Introduction

Say’s Law states that” Supply creates its own demand”.

Answer 8

Expert Solution & Answer

To determine

Mechanism by which supply creates its own demand.

Explanation of Solution

It is based on criteria that someone’s expenditure is another person’s income. Supply of goods requires combination of inputs which are used for production of goods and services. These inputs are called factor of production. These are Land, Labor, capital, entrepreneurship. Combination of factor inputs produces goods, which is considered as production activity. Firms or producers supply goods to the consumers who are demanders of goods. As income is earned by these factor inputs in the form of wages, profits, interest etc. They use such income for demand of another goods and services.

So, supply of goods creates income which is used to demand other goods and services in an economy.

Economics Concept Introduction

Say’s Law states that” Supply creates its own demand”.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

To determine

Mechanism by which supply creates its own demand.

Answer 12

Explanation of Solution

It is based on criteria that someone’s expenditure is another person’s income. Supply of goods requires combination of inputs which are used for production of goods and services. These inputs are called factor of production. These are Land, Labor, capital, entrepreneurship. Combination of factor inputs produces goods, which is considered as production activity. Firms or producers supply goods to the consumers who are demanders of goods. As income is earned by these factor inputs in the form of wages, profits, interest etc. They use such income for demand of another goods and services.

So, supply of goods creates income which is used to demand other goods and services in an economy.