Cause for the simultaneous rise in the price and quantity in the economy.

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Answer 1

Question

Chapter 5, Problem 1QE

To determine

Cause for the simultaneous rise in the price and quantity in the economy.

Expert Solution & Answer

Explanation of Solution

The equilibrium price and quantity demanded in the economy are obtained at the intersection of the demand and supply curve in the economy. Thus, any shift in the demand or supply curves or the changes in both causes the equilibrium to change in the economy.

When the demand increases, the economy would face a temporary shortage of goods and services, which will increase the general price level in the economy. The increased demand and price influence the suppliers to increase their supply in order to earn higher revenue from the market. Thus, the simplest cause for the increase in the equilibrium price and quantity will be the rightward shift in the demand curve in the economy.

Economics Concept Introduction

Market equilibrium: Market equilibrium is obtained at the point where the market demand equals with the market supply in the economy. There will be no excess or shortage in the economy when the economy is in its equilibrium.

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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…

Answer 2

Question

Chapter 5, Problem 1QE

To determine

Cause for the simultaneous rise in the price and quantity in the economy.

Expert Solution & Answer

Explanation of Solution

The equilibrium price and quantity demanded in the economy are obtained at the intersection of the demand and supply curve in the economy. Thus, any shift in the demand or supply curves or the changes in both causes the equilibrium to change in the economy.

When the demand increases, the economy would face a temporary shortage of goods and services, which will increase the general price level in the economy. The increased demand and price influence the suppliers to increase their supply in order to earn higher revenue from the market. Thus, the simplest cause for the increase in the equilibrium price and quantity will be the rightward shift in the demand curve in the economy.

Economics Concept Introduction

Market equilibrium: Market equilibrium is obtained at the point where the market demand equals with the market supply in the economy. There will be no excess or shortage in the economy when the economy is in its equilibrium.

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Answer 3

Question

Chapter 5, Problem 1QE

To determine

Cause for the simultaneous rise in the price and quantity in the economy.

Expert Solution & Answer

Explanation of Solution

The equilibrium price and quantity demanded in the economy are obtained at the intersection of the demand and supply curve in the economy. Thus, any shift in the demand or supply curves or the changes in both causes the equilibrium to change in the economy.

When the demand increases, the economy would face a temporary shortage of goods and services, which will increase the general price level in the economy. The increased demand and price influence the suppliers to increase their supply in order to earn higher revenue from the market. Thus, the simplest cause for the increase in the equilibrium price and quantity will be the rightward shift in the demand curve in the economy.

Economics Concept Introduction

Market equilibrium: Market equilibrium is obtained at the point where the market demand equals with the market supply in the economy. There will be no excess or shortage in the economy when the economy is in its equilibrium.

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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 5, Problem 1QE

To determine

Cause for the simultaneous rise in the price and quantity in the economy.

Expert Solution & Answer

Explanation of Solution

The equilibrium price and quantity demanded in the economy are obtained at the intersection of the demand and supply curve in the economy. Thus, any shift in the demand or supply curves or the changes in both causes the equilibrium to change in the economy.

When the demand increases, the economy would face a temporary shortage of goods and services, which will increase the general price level in the economy. The increased demand and price influence the suppliers to increase their supply in order to earn higher revenue from the market. Thus, the simplest cause for the increase in the equilibrium price and quantity will be the rightward shift in the demand curve in the economy.

Economics Concept Introduction

Market equilibrium: Market equilibrium is obtained at the point where the market demand equals with the market supply in the economy. There will be no excess or shortage in the economy when the economy is in its equilibrium.

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

Chapter 5, Problem 1QE

To determine

Cause for the simultaneous rise in the price and quantity in the economy.

Expert Solution & Answer

Explanation of Solution

The equilibrium price and quantity demanded in the economy are obtained at the intersection of the demand and supply curve in the economy. Thus, any shift in the demand or supply curves or the changes in both causes the equilibrium to change in the economy.

When the demand increases, the economy would face a temporary shortage of goods and services, which will increase the general price level in the economy. The increased demand and price influence the suppliers to increase their supply in order to earn higher revenue from the market. Thus, the simplest cause for the increase in the equilibrium price and quantity will be the rightward shift in the demand curve in the economy.

Economics Concept Introduction

Market equilibrium: Market equilibrium is obtained at the point where the market demand equals with the market supply in the economy. There will be no excess or shortage in the economy when the economy is in its equilibrium.

Answer 6

Chapter 5, Problem 1QE

To determine

Cause for the simultaneous rise in the price and quantity in the economy.

Expert Solution & Answer

Explanation of Solution

The equilibrium price and quantity demanded in the economy are obtained at the intersection of the demand and supply curve in the economy. Thus, any shift in the demand or supply curves or the changes in both causes the equilibrium to change in the economy.

When the demand increases, the economy would face a temporary shortage of goods and services, which will increase the general price level in the economy. The increased demand and price influence the suppliers to increase their supply in order to earn higher revenue from the market. Thus, the simplest cause for the increase in the equilibrium price and quantity will be the rightward shift in the demand curve in the economy.

Economics Concept Introduction

Market equilibrium: Market equilibrium is obtained at the point where the market demand equals with the market supply in the economy. There will be no excess or shortage in the economy when the economy is in its equilibrium.

Answer 7

Chapter 5, Problem 1QE

To determine

Cause for the simultaneous rise in the price and quantity in the economy.

Answer 8

Expert Solution & Answer

Explanation of Solution

The equilibrium price and quantity demanded in the economy are obtained at the intersection of the demand and supply curve in the economy. Thus, any shift in the demand or supply curves or the changes in both causes the equilibrium to change in the economy.

When the demand increases, the economy would face a temporary shortage of goods and services, which will increase the general price level in the economy. The increased demand and price influence the suppliers to increase their supply in order to earn higher revenue from the market. Thus, the simplest cause for the increase in the equilibrium price and quantity will be the rightward shift in the demand curve in the economy.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Economics Concept Introduction

Market equilibrium: Market equilibrium is obtained at the point where the market demand equals with the market supply in the economy. There will be no excess or shortage in the economy when the economy is in its equilibrium.

Answer 12

Ch. 5.1 - Prob. 1Q Ch. 5.1 - Prob. 2Q Ch. 5.1 - Prob. 3Q Ch. 5.1 - Prob. 4Q Ch. 5.1 - Prob. 5Q Ch. 5.1 - Prob. 6Q Ch. 5.1 - Prob. 7Q Ch. 5.1 - Prob. 8Q Ch. 5.1 - Prob. 9Q Ch. 5.1 - Prob. 10Q

Cause for the simultaneous rise in the price and quantity in the economy.

Cause for the simultaneous rise in the price and quantity in the economy.

Explanation of Solution

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