The determinants of the demand curve.

Question

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Answer 1

Question

Chapter 4, Problem 1CQQ

To determine

The determinants of the demand curve.

Expert Solution & Answer

Answer to Problem 1CQQ

Option ‘b’ is the correct answer.

Explanation of Solution

Option (b):

A change in price of hamburgers leads to a movement along the demand curve and not a shift of the demand curve because price is measured on the vertical axis of a demand curve. Thus, option ‘b’ is correct.

Option (a):

Hot dogs can be considered as substitutes of hamburgers. A change in the price of a substitute good shifts the demand curve of a good. Thus, a change in price of hot dogs shifts the demand curve of hamburgers. So, option ‘a’ is incorrect.

Option (c):

Hamburger buns can be considered as complementary goods of hamburgers. A change in the price of a complementary good shifts the demand curve of a good. Thus, a change in the price of hamburger buns shifts the demand curve of a hamburger. So, option ‘c’ is incorrect.

Option (d):

A change in the income of a consumer of a good shifts the demand curve of that good. Thus, a change in the income of hamburger consumers shifts the demand curve of hamburger. So, option ‘d’ is incorrect.

Economics Concept Introduction

Concept introduction:

Complementary good: It is agood with a negative cross elasticity of demand, that is, a good whose demand is increased when the price of another good is decreased.

Substitute good: It is agood with a positive cross elasticity of demand, that is, a good whose demand is decreased when the price of another good is decreased.

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Students have asked these similar questions

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

Question

Chapter 4, Problem 1CQQ

To determine

The determinants of the demand curve.

Expert Solution & Answer

Answer to Problem 1CQQ

Option ‘b’ is the correct answer.

Explanation of Solution

Option (b):

A change in price of hamburgers leads to a movement along the demand curve and not a shift of the demand curve because price is measured on the vertical axis of a demand curve. Thus, option ‘b’ is correct.

Option (a):

Hot dogs can be considered as substitutes of hamburgers. A change in the price of a substitute good shifts the demand curve of a good. Thus, a change in price of hot dogs shifts the demand curve of hamburgers. So, option ‘a’ is incorrect.

Option (c):

Hamburger buns can be considered as complementary goods of hamburgers. A change in the price of a complementary good shifts the demand curve of a good. Thus, a change in the price of hamburger buns shifts the demand curve of a hamburger. So, option ‘c’ is incorrect.

Option (d):

A change in the income of a consumer of a good shifts the demand curve of that good. Thus, a change in the income of hamburger consumers shifts the demand curve of hamburger. So, option ‘d’ is incorrect.

Economics Concept Introduction

Concept introduction:

Complementary good: It is agood with a negative cross elasticity of demand, that is, a good whose demand is increased when the price of another good is decreased.

Substitute good: It is agood with a positive cross elasticity of demand, that is, a good whose demand is decreased when the price of another good is decreased.

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

Answer 3

Question

Chapter 4, Problem 1CQQ

To determine

The determinants of the demand curve.

Expert Solution & Answer

Answer to Problem 1CQQ

Option ‘b’ is the correct answer.

Explanation of Solution

Option (b):

A change in price of hamburgers leads to a movement along the demand curve and not a shift of the demand curve because price is measured on the vertical axis of a demand curve. Thus, option ‘b’ is correct.

Option (a):

Hot dogs can be considered as substitutes of hamburgers. A change in the price of a substitute good shifts the demand curve of a good. Thus, a change in price of hot dogs shifts the demand curve of hamburgers. So, option ‘a’ is incorrect.

Option (c):

Hamburger buns can be considered as complementary goods of hamburgers. A change in the price of a complementary good shifts the demand curve of a good. Thus, a change in the price of hamburger buns shifts the demand curve of a hamburger. So, option ‘c’ is incorrect.

Option (d):

A change in the income of a consumer of a good shifts the demand curve of that good. Thus, a change in the income of hamburger consumers shifts the demand curve of hamburger. So, option ‘d’ is incorrect.

Economics Concept Introduction

Concept introduction:

Complementary good: It is agood with a negative cross elasticity of demand, that is, a good whose demand is increased when the price of another good is decreased.

Substitute good: It is agood with a positive cross elasticity of demand, that is, a good whose demand is decreased when the price of another good is decreased.

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

Answer 4

Question

Chapter 4, Problem 1CQQ

To determine

The determinants of the demand curve.

Expert Solution & Answer

Answer to Problem 1CQQ

Option ‘b’ is the correct answer.

Explanation of Solution

Option (b):

A change in price of hamburgers leads to a movement along the demand curve and not a shift of the demand curve because price is measured on the vertical axis of a demand curve. Thus, option ‘b’ is correct.

Option (a):

Hot dogs can be considered as substitutes of hamburgers. A change in the price of a substitute good shifts the demand curve of a good. Thus, a change in price of hot dogs shifts the demand curve of hamburgers. So, option ‘a’ is incorrect.

Option (c):

Hamburger buns can be considered as complementary goods of hamburgers. A change in the price of a complementary good shifts the demand curve of a good. Thus, a change in the price of hamburger buns shifts the demand curve of a hamburger. So, option ‘c’ is incorrect.

Option (d):

A change in the income of a consumer of a good shifts the demand curve of that good. Thus, a change in the income of hamburger consumers shifts the demand curve of hamburger. So, option ‘d’ is incorrect.

Economics Concept Introduction

Concept introduction:

Complementary good: It is agood with a negative cross elasticity of demand, that is, a good whose demand is increased when the price of another good is decreased.

Substitute good: It is agood with a positive cross elasticity of demand, that is, a good whose demand is decreased when the price of another good is decreased.

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

Answer 5

Chapter 4, Problem 1CQQ

To determine

The determinants of the demand curve.

Expert Solution & Answer

Answer to Problem 1CQQ

Option ‘b’ is the correct answer.

Explanation of Solution

Option (b):

A change in price of hamburgers leads to a movement along the demand curve and not a shift of the demand curve because price is measured on the vertical axis of a demand curve. Thus, option ‘b’ is correct.

Option (a):

Hot dogs can be considered as substitutes of hamburgers. A change in the price of a substitute good shifts the demand curve of a good. Thus, a change in price of hot dogs shifts the demand curve of hamburgers. So, option ‘a’ is incorrect.

Option (c):

Hamburger buns can be considered as complementary goods of hamburgers. A change in the price of a complementary good shifts the demand curve of a good. Thus, a change in the price of hamburger buns shifts the demand curve of a hamburger. So, option ‘c’ is incorrect.

Option (d):

A change in the income of a consumer of a good shifts the demand curve of that good. Thus, a change in the income of hamburger consumers shifts the demand curve of hamburger. So, option ‘d’ is incorrect.

Economics Concept Introduction

Concept introduction:

Complementary good: It is agood with a negative cross elasticity of demand, that is, a good whose demand is increased when the price of another good is decreased.

Substitute good: It is agood with a positive cross elasticity of demand, that is, a good whose demand is decreased when the price of another good is decreased.

Answer 6

Chapter 4, Problem 1CQQ

To determine

The determinants of the demand curve.

Expert Solution & Answer

Answer to Problem 1CQQ

Option ‘b’ is the correct answer.

Explanation of Solution

Option (b):

A change in price of hamburgers leads to a movement along the demand curve and not a shift of the demand curve because price is measured on the vertical axis of a demand curve. Thus, option ‘b’ is correct.

Option (a):

Hot dogs can be considered as substitutes of hamburgers. A change in the price of a substitute good shifts the demand curve of a good. Thus, a change in price of hot dogs shifts the demand curve of hamburgers. So, option ‘a’ is incorrect.

Option (c):

Hamburger buns can be considered as complementary goods of hamburgers. A change in the price of a complementary good shifts the demand curve of a good. Thus, a change in the price of hamburger buns shifts the demand curve of a hamburger. So, option ‘c’ is incorrect.

Option (d):

A change in the income of a consumer of a good shifts the demand curve of that good. Thus, a change in the income of hamburger consumers shifts the demand curve of hamburger. So, option ‘d’ is incorrect.

Economics Concept Introduction

Concept introduction:

Complementary good: It is agood with a negative cross elasticity of demand, that is, a good whose demand is increased when the price of another good is decreased.

Substitute good: It is agood with a positive cross elasticity of demand, that is, a good whose demand is decreased when the price of another good is decreased.

Answer 7

Chapter 4, Problem 1CQQ

To determine

The determinants of the demand curve.

Answer 8

Expert Solution & Answer

Answer to Problem 1CQQ

Option ‘b’ is the correct answer.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Explanation of Solution

Option (b):

A change in price of hamburgers leads to a movement along the demand curve and not a shift of the demand curve because price is measured on the vertical axis of a demand curve. Thus, option ‘b’ is correct.

Option (a):

Hot dogs can be considered as substitutes of hamburgers. A change in the price of a substitute good shifts the demand curve of a good. Thus, a change in price of hot dogs shifts the demand curve of hamburgers. So, option ‘a’ is incorrect.

Option (c):

Hamburger buns can be considered as complementary goods of hamburgers. A change in the price of a complementary good shifts the demand curve of a good. Thus, a change in the price of hamburger buns shifts the demand curve of a hamburger. So, option ‘c’ is incorrect.

Option (d):

A change in the income of a consumer of a good shifts the demand curve of that good. Thus, a change in the income of hamburger consumers shifts the demand curve of hamburger. So, option ‘d’ is incorrect.

Answer 12

Economics Concept Introduction

Concept introduction:

Complementary good: It is agood with a negative cross elasticity of demand, that is, a good whose demand is increased when the price of another good is decreased.

Substitute good: It is agood with a positive cross elasticity of demand, that is, a good whose demand is decreased when the price of another good is decreased.

Answer 13

Ch. 4.1 - Prob. 1QQ Ch. 4.2 - Prob. 2QQ Ch. 4.3 - Prob. 3QQ Ch. 4.4 - Prob. 4QQ Ch. 4 - Prob. 1CQQ Ch. 4 - Prob. 2CQQ Ch. 4 - Prob. 3CQQ Ch. 4 - Prob. 4CQQ Ch. 4 - Prob. 5CQQ Ch. 4 - Prob. 6CQQ

The determinants of the demand curve.

The determinants of the demand curve.

Answer to Problem 1CQQ

Explanation of Solution

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Chapter 4 Solutions