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Demand & Supply

Elastic Demand and Price rise.

There are six condition given. Assuming only PRICE changes. 1. Elastic demand and Price rises. 2. Inelastic demand and Price rises. 3. Elastic demand and Price falls. 4. Inelastic demand and Price falls. 5. Unit elastic demand and Price rises. 6. Unit elastic demand and Price falls. Which three should work for those

Intersects & Demand Graphs

Please explain step-by-step how to do these. thanks! 6) In the above diagrams assume the following: MC intersects AVC @ P= $8, Q=40 and MC intersects ATC @ P= $12, Q = 50. (Min MC =$ 4). In the market demand schedule on the right, at a price of $16, the quantity demanded = 6000, and at a price of $12 the quantity demanded r

Problem concerning maximizing net revenues

The rule for maximizing net revenue (total revenue minus total cost) is: Take any action if, but only if, the expected marginal revenue exceeds the expected marginal cost. What is marginal revenue? How is it related to demand? You can test your grasp of this key concept by examining the case of Maureen Supplize, who runs a yacht

The MacWend Drive-In

2. The MacWend Drive-In has determined that demand for hamburgers is given by the following equation: Q = 205.2 + 23.0A - 200.0PM + 100.0PC + 0.5I (1.85) (2.64) (-5.61) (2.02) (4.25) where Q is the number of hamburgers sold per month (in 1,000s), A is the advertising expenditures during the prev

Rule of Maximization

#1 Earlier we noted that the rule for maximization set forth in the text contradicts some well honored traditional principles such as " Never give up", "Anything worth doing is worth doing well," or "Waste not. want not." Explain the contradiction for each of these rules #2 Many candidates for political office, particularly

A consumer spends all of her income on two goods, coffee and doughnuts. She purchases coffee at 25 cents a unit with a total utility of 800 and a marginal utility of 12. Doughnuts are purchase at 75 cents a unit with a total utility of 200 and a marginal utility of 24. In order to reach consumer equilibrium, she should consume:

53. A consumer spends all of her income on two goods, coffee and doughnuts. She purchases coffee at 25 cents a unit with a total utility of 800 and a marginal utility of 12. Doughnuts are purchase at 75 cents a unit with a total utility of 200 and a marginal utility of 24. In order to reach consumer equilibrium, she should co

Demand Curve

47. The following is a complete and correct definition of the demand curve for commodity X. The demand curve shows, for a given market: A) how much of X would be bought at the equilibrium price. B) how, as people's incomes rise and they have more money to spend, their purchases of X would increase. C) how the amount of

Apply demand, supply and competitive equilibrium analysis

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

Profit maximization

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

Reserve Ratio and Money Supply

Assuming a 15% reserve ratio, an increase in deposits of $300,000 could eventually result in: A) a $2 million increase in the money supply. B) a $345,000 increase in the money supply. C) a $45,000 increase in the money supply. D) a $1.5 million increase in the money supply. E) there would be no change in the mon

Equilibrium prices in the United States

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.

Determine how to reach equilibrium

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

Use economic tools to critique and explain.

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.

Price elasticity

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

Envelope Theorem Inferior Goods

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 &#880

Define excess burden

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

Labor Economics

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

Excess Burden

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

Elasticity of Demand

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

Supply Curve

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