Review Figure 3.4. Suppose the price of gasoline is $ 1 . 6 0 per gallon. Is the quantity demanded higher or lower than at the equilibrium price of $ 1 . 4 0 per gallon? What about the quantity supplied? Is there a shortage or a surplus in the market? If so, how much? Figure 3.4 Demand and Supply of Gasoline

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Answer 1

Textbook Question

Chapter 3, Problem 1SCQ

Review Figure 3.4. Suppose the price of gasoline is $ 1 . 6 0 per gallon. Is the quantity demanded higher or lower than at the equilibrium price of $ 1 . 4 0 per gallon? What about the quantity supplied? Is there a shortage or a surplus in the market? If so, how much?

Chapter 3, Problem 1SCQ, Review Figure 3.4. Suppose the price of gasoline is 1.60 per gallon. Is the quantity demanded higher

Figure 3.4 Demand and Supply of Gasoline

Expert Solution & Answer

To determine

If the price of gasoline is $1.60 per gallon and the equilibrium price is $1.40 per gallon. Comment whether the quantity demanded and supplied is higher or lower at $1.60 per gallon. Is there a shortage or surplus?

Explanation of Solution

As per the diagram, the equilibrium price is $1.40 per gallon in the market. Any price above the equilibrium price level in the market creates surplus of the product in the market and any price below the equilibrium price creates a shortage of the product in the market.

Principles of Macroeconomics 2e, Chapter 3, Problem 1SCQ

In the above figure, at price level $1.60 per gallon, the quantity demand is 550 millions of gallons and quantity supply is 680 million gallons, represented by point A and B in the diagram. Clearly, we can see that quantity supply is more than quantity demand and there is a surplus of the product.

If the price is below the equilibrium price, then there will be shortage of the product.

Economics Concept Introduction

Equilibrium Price: It is that level of price where demand of a product is equal to the supply of a product.

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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 3, Problem 1SCQ

Review Figure 3.4. Suppose the price of gasoline is $ 1 . 6 0 per gallon. Is the quantity demanded higher or lower than at the equilibrium price of $ 1 . 4 0 per gallon? What about the quantity supplied? Is there a shortage or a surplus in the market? If so, how much?

Chapter 3, Problem 1SCQ, Review Figure 3.4. Suppose the price of gasoline is 1.60 per gallon. Is the quantity demanded higher

Figure 3.4 Demand and Supply of Gasoline

Expert Solution & Answer

To determine

If the price of gasoline is $1.60 per gallon and the equilibrium price is $1.40 per gallon. Comment whether the quantity demanded and supplied is higher or lower at $1.60 per gallon. Is there a shortage or surplus?

Explanation of Solution

As per the diagram, the equilibrium price is $1.40 per gallon in the market. Any price above the equilibrium price level in the market creates surplus of the product in the market and any price below the equilibrium price creates a shortage of the product in the market.

Principles of Macroeconomics 2e, Chapter 3, Problem 1SCQ

In the above figure, at price level $1.60 per gallon, the quantity demand is 550 millions of gallons and quantity supply is 680 million gallons, represented by point A and B in the diagram. Clearly, we can see that quantity supply is more than quantity demand and there is a surplus of the product.

If the price is below the equilibrium price, then there will be shortage of the product.

Economics Concept Introduction

Equilibrium Price: It is that level of price where demand of a product is equal to the supply of a product.

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

Answer 3

Textbook Question

Chapter 3, Problem 1SCQ

Review Figure 3.4. Suppose the price of gasoline is $ 1 . 6 0 per gallon. Is the quantity demanded higher or lower than at the equilibrium price of $ 1 . 4 0 per gallon? What about the quantity supplied? Is there a shortage or a surplus in the market? If so, how much?

Chapter 3, Problem 1SCQ, Review Figure 3.4. Suppose the price of gasoline is 1.60 per gallon. Is the quantity demanded higher

Figure 3.4 Demand and Supply of Gasoline

Expert Solution & Answer

To determine

If the price of gasoline is $1.60 per gallon and the equilibrium price is $1.40 per gallon. Comment whether the quantity demanded and supplied is higher or lower at $1.60 per gallon. Is there a shortage or surplus?

Explanation of Solution

As per the diagram, the equilibrium price is $1.40 per gallon in the market. Any price above the equilibrium price level in the market creates surplus of the product in the market and any price below the equilibrium price creates a shortage of the product in the market.

Principles of Macroeconomics 2e, Chapter 3, Problem 1SCQ

In the above figure, at price level $1.60 per gallon, the quantity demand is 550 millions of gallons and quantity supply is 680 million gallons, represented by point A and B in the diagram. Clearly, we can see that quantity supply is more than quantity demand and there is a surplus of the product.

If the price is below the equilibrium price, then there will be shortage of the product.

Economics Concept Introduction

Equilibrium Price: It is that level of price where demand of a product is equal to the supply of a product.

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 3, Problem 1SCQ

Review Figure 3.4. Suppose the price of gasoline is $ 1 . 6 0 per gallon. Is the quantity demanded higher or lower than at the equilibrium price of $ 1 . 4 0 per gallon? What about the quantity supplied? Is there a shortage or a surplus in the market? If so, how much?

Chapter 3, Problem 1SCQ, Review Figure 3.4. Suppose the price of gasoline is 1.60 per gallon. Is the quantity demanded higher

Figure 3.4 Demand and Supply of Gasoline

Expert Solution & Answer

To determine

If the price of gasoline is $1.60 per gallon and the equilibrium price is $1.40 per gallon. Comment whether the quantity demanded and supplied is higher or lower at $1.60 per gallon. Is there a shortage or surplus?

Explanation of Solution

As per the diagram, the equilibrium price is $1.40 per gallon in the market. Any price above the equilibrium price level in the market creates surplus of the product in the market and any price below the equilibrium price creates a shortage of the product in the market.

Principles of Macroeconomics 2e, Chapter 3, Problem 1SCQ

In the above figure, at price level $1.60 per gallon, the quantity demand is 550 millions of gallons and quantity supply is 680 million gallons, represented by point A and B in the diagram. Clearly, we can see that quantity supply is more than quantity demand and there is a surplus of the product.

If the price is below the equilibrium price, then there will be shortage of the product.

Economics Concept Introduction

Equilibrium Price: It is that level of price where demand of a product is equal to the supply of a product.

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

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Answer 6

Textbook Question

Answer 7

Expert Solution & Answer

To determine

If the price of gasoline is $1.60 per gallon and the equilibrium price is $1.40 per gallon. Comment whether the quantity demanded and supplied is higher or lower at $1.60 per gallon. Is there a shortage or surplus?

Explanation of Solution

As per the diagram, the equilibrium price is $1.40 per gallon in the market. Any price above the equilibrium price level in the market creates surplus of the product in the market and any price below the equilibrium price creates a shortage of the product in the market.

Principles of Macroeconomics 2e, Chapter 3, Problem 1SCQ

In the above figure, at price level $1.60 per gallon, the quantity demand is 550 millions of gallons and quantity supply is 680 million gallons, represented by point A and B in the diagram. Clearly, we can see that quantity supply is more than quantity demand and there is a surplus of the product.

If the price is below the equilibrium price, then there will be shortage of the product.

Economics Concept Introduction

Equilibrium Price: It is that level of price where demand of a product is equal to the supply of a product.

Answer 8

Expert Solution & Answer

To determine

If the price of gasoline is $1.60 per gallon and the equilibrium price is $1.40 per gallon. Comment whether the quantity demanded and supplied is higher or lower at $1.60 per gallon. Is there a shortage or surplus?

Explanation of Solution

As per the diagram, the equilibrium price is $1.40 per gallon in the market. Any price above the equilibrium price level in the market creates surplus of the product in the market and any price below the equilibrium price creates a shortage of the product in the market.

Principles of Macroeconomics 2e, Chapter 3, Problem 1SCQ

In the above figure, at price level $1.60 per gallon, the quantity demand is 550 millions of gallons and quantity supply is 680 million gallons, represented by point A and B in the diagram. Clearly, we can see that quantity supply is more than quantity demand and there is a surplus of the product.

If the price is below the equilibrium price, then there will be shortage of the product.

Economics Concept Introduction

Equilibrium Price: It is that level of price where demand of a product is equal to the supply of a product.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

To determine

If the price of gasoline is $1.60 per gallon and the equilibrium price is $1.40 per gallon. Comment whether the quantity demanded and supplied is higher or lower at $1.60 per gallon. Is there a shortage or surplus?

Answer 12

Explanation of Solution

As per the diagram, the equilibrium price is $1.40 per gallon in the market. Any price above the equilibrium price level in the market creates surplus of the product in the market and any price below the equilibrium price creates a shortage of the product in the market.

Principles of Macroeconomics 2e, Chapter 3, Problem 1SCQ

In the above figure, at price level $1.60 per gallon, the quantity demand is 550 millions of gallons and quantity supply is 680 million gallons, represented by point A and B in the diagram. Clearly, we can see that quantity supply is more than quantity demand and there is a surplus of the product.

If the price is below the equilibrium price, then there will be shortage of the product.

Answer 13

Economics Concept Introduction

Equilibrium Price: It is that level of price where demand of a product is equal to the supply of a product.

Answer 14

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