1. "If price rises then demand decreases. But if demand decreases, then equilibrium price will fall. Therefore, one cannot say with certainty what the net effect of an intitial decrease in price will be." Is this statement correct? Are all the terms used correctly in this statement? Let me know your thoughts. How would you des
An online retailer mails out catalogs. You might browse through one and decide to order. You call a toll free number and place your order and it will arrive in several days by post or UPS. However, what you probably don't know (since you only live at one post office address) is that the merchant sends out multiple catalogs at th
1. The United States represents a small part of the world orange market. a. Draw a diagram depicting the equilibrium in the U.S. orange market without international trade. Identify the equilibrium price, equilibrium quantity, consumer surplus, and producer surplus. b. Suppose that the world orange price is below the U.S.
Market Equilibrium (example question) The following relationships describe monthly demand and supply conditions in the metropolitan area for recyclable aluminum: QD = 317,500 - 10,000P (Demand) QS = 2,500 + 7,500P (Supply) Where Q is quantity measured in pounds of aluminum scrap metal, and P is the price in cents
One of the more pressing issues of world population concerns those numbers not being much of a viable labor force today, for 2010 and beyond. If that is the case, the demand for labor is really segmented into (1) healthy individuals with market skills versus (2) the rest of the population. Explain this concept/idea.
I am stuck at price elasticity, so if you can help me out.
1: The demand for personal computers can be characterized by the following elasticities: Price elasticity = -5 Cross-price elasticity with software* = -4 Income elasticity =2.5 *relates a change in computer prices to changes in the quantity demanded of software Indicate whether each of the following statements is tru
Consider the problem of maximizing u(c,l) subject to pc + wl = wT + Y, where c is consumption, l is leisure time, T is the total time endowment, and Y is non-wage income. Show that if leisure is an inferior good, then the labor supply function is upward-sloping. b) Given the problem of maximizing ln x subject to α Ͱ
A. An economist estimates that a new tax on labor income has had an effect on the labor supply of affected taxpayers (in other words, affected taxpayers work the same amount of hours after the tax is imposed). He therefore concludes that the excess burden of the new tax is zero. Do you agree? Define "excess burden", and explain
The city of Trenton is considering a substantial annual per employee tax on Trenton State College. Suppose that the labor supply curve to TSC is relatively flat because the employees have alternative places to work, and that the College has limited liability to substitute machines or other inputs for people. a. Show this s
In Risainia (a hypothetical country), the prices of commodities such as food and clothing are set in a free market, but housing is heavily subsidized by local governments. A two-bedroom apartment, for example, might rent for $10.50 per month. (Utilities and other fees increase the cost to about $350.) Consider the following st
Cross-Price Elasticity. B.B. Lean is a catalog retailer of a wide variety of sporting goods and recreational products. Although the market response to the company's spring catalog was generally good, sales of B.B. Lean's $140 deluxe garment bag declined from 10,000 to 4,800 units. During this period, a competitor offered a wh
What is supply? What is law of supply and what are the determinants of supply?
A) In the long-run in perfectly competitive industries the (long-run) supply curve of the industry can be derived. Explain likely outcomes (slopes) of long-run supply curve in various situations B) Explain economies of scale. What are the major reasons for this phenomenon? What are the likely slopes (shapes) of the long-run a