(a)
To analyze the
Answer to Problem 1TY
The demand curve will be a vertical straight line.
Explanation of Solution
When the percentage change in quantity demanded exceeds the percentage change in price, the demand is said to be elastic.
When it is less than the percentage change in price, then the demand is said to be inelastic. When the percentage change is equal, then the demand is unitary elastic.
The shape of a demand curve depends on the elasticity of demand for a good. A medicine that means life or death for a patient is a necessary good for the patient. Hence, its demand is perfectly inelastic.
The curve of perfectly
The graph shows that whatever be the price charged for the medicine, the patient will purchase it because it means life or death for him. Hence, this kind of demand curve is a vertical straight line with elasticity 0.
(b)
To analyze: the demand curve of French fries in a food court with kiosks offering many types of food.
Answer to Problem 1TY
The demand curve will be flat in shape.
Explanation of Solution
Elasticity of demand refers to the degree of responsiveness of a change in the quantity demanded for a given change in the price level of a good.
When the percentage change in quantity demanded exceeds the percentage change in price, the demand is said to be elastic.
When it is less than the percentage change in price, then the demand is said to be inelastic. When the percentage changes are equal, then the demand is unitary elastic.
The shape of a demand curve depends on the elasticity of demand for a good. French fries are good with many other substitutes. K are offering a variety of other goods which makes demand curve of French fries more elastic.
The curve of this demand is shown below:
The graph shows that a slight increase in the price of French fries will make consumers shift their preferences to other goods. Hence, the quantity demanded will decrease largely. This type of demand curve is flat with an elasticity greater than 1.
Want to see more full solutions like this?
Chapter 4 Solutions
Macroeconomics: Principles and Policy (MindTap Course List)
- not use ai pleasearrow_forwardsubject to X1 X2 Maximize dollars of interest earned = 0.07X1+0.11X2+0.19X3+0.15X4 ≤ 1,000,000 <2,500,000 X3 ≤ 1,500,000 X4 ≤ 1,800,000 X3 + XA ≥ 0.55 (X1+X2+X3+X4) X1 ≥ 0.15 (X1+X2+X3+X4) X1 + X2 X3 + XA < 5,000,000 X1, X2, X3, X4 ≥ 0arrow_forwardnot use aiarrow_forward
- Please help and Solve! (Note: this is a practice problem)arrow_forwardPlease help and thanks! (Note: This is a practice problem!)arrow_forwardUnit VI Assignment Instructions: This assignment has two parts. Answer the questions using the charts. Part 1: Firm 1 High Price Low Price High Price 8,8 0,10 Firm 2 Low Price 10,0 3,3 Question: For the above game, identify the Nash Equilibrium. Does Firm 1 have a dominant strategy? If so, what is it? Does Firm 2 have a dominant strategy? If so, what is it? Your response:arrow_forward
- not use ai please don't kdjdkdkfjnxncjcarrow_forwardAsk one question at a time. Keep questions specific and include all details. Need more help? Subject matter experts with PhDs and Masters are standing by 24/7 to answer your question.**arrow_forward1b. (5 pts) Under the 1990 Farm Bill and given the initial situation of a target price and marketing loan, indicate where the market price (MP), quantity supplied (QS) and demanded (QD), government stocks (GS), and Deficiency Payments (DP) and Marketing Loan Gains (MLG), if any, would be on the graph below. If applicable, indicate the price floor (PF) on the graph. TP $ NLR So Do Q/yrarrow_forward
- Now, let us assume that Brie has altruistic preferences. Her utility function is now given by: 1 UB (xA, YA, TB,YB) = (1/2) (2x+2y) + (2x+2y) What would her utility be at the endowment now? (Round off your answer to the nearest whole number.) 110arrow_forwardProblema 4 (20 puntos): Supongamos que tenemos un ingreso de $120 y enfrentamos los precios P₁ =6 y P₂ =4. Nuestra función de utilidad es: U(x1, x2) = x0.4x0.6 a) Planteen el problema de optimización y obtengan las condiciones de primer orden. b) Encuentren el consumo óptimo de x1 y x2. c) ¿Cómo cambiará nuestra elección óptima si el ingreso aumenta a $180?arrow_forwardPlease draw the graph for number 4 and 5, I appreciate it!!arrow_forward
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Exploring EconomicsEconomicsISBN:9781544336329Author:Robert L. SextonPublisher:SAGE Publications, Inc
Economics Today and Tomorrow, Student EditionEconomicsISBN:9780078747663Author:McGraw-HillPublisher:Glencoe/McGraw-Hill School Pub Co
Microeconomics: Private and Public Choice (MindTa...EconomicsISBN:9781305506893Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning