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# Demand & Supply

### Labor market effects demonstrated graphically.

Show the effect of each of the following events on the market for labor in the computer manufacturing industry. Use graphs. a. Congress buys personal computers for all American college students. Wouldn't the demand curve shift to the right while the supply curve stays the same. b. More college students major in engin

### Market equilibrium is real

Discuss if you agree or disagree with this statement and explain your position: Market equilibrium (price and quantity of equilibrium) is just a theoretical result. The real market equilibrium is different most of the time. So, firms should never use models to make production decisions.

### Revenue and Profit for an Airline

American Airlines leases a 300-seat carrier to fly its daily Dallas-Denver route. It recently lowered its ticket price from \$240 to \$200, and observed the following demand for seats by business and tourist-class passengers: Price Q(business) Q(tourists) Q(total) Revenue (business) Revenue (tourists) Revenue (total) 240

### Demand Curve / Marginal Products

Question 1 Big Steel Co. is a price leader in the local steel market. The other, smaller manufacturers set their price based on that established by Big Steel. The following information has been gathered by Big Steel's pricing department. Demand curve for steel is equation to Qt = 10,000 - 0.5P where Qt is the total amo

### Demand Function - Demand, Supply, and Market Equilibrium

The general demand function for a good, Good A, isâ?¦ QD = 800 â?" 5*P + 0.02*M + 6*PR + 3*T + 5*PE + .4*N Where QD = quantity demanded of Good A per month P = the price of Good A M = average household income PR = the price of a related good, weâ??ll call it Good B T = a consumer taste index PE = the price consum

### Over the past three years, the price of gasoline has ranged from \$1.50 a gallon to \$4.20 a gallon. To what extent, if any, are you able to change your quantity demanded for gasoline as the price goes up and down? Would the answer be different if the price went to \$4.20 and stayed there for several years? What does the concept of elasticity have to do with this?

Over the past three years, the price of gasoline has ranged from \$1.50 a gallon to \$4.20 a gallon. To what extent, if any, are you able to change your quantity demanded for gasoline as the price goes up and down? Would the answer be different if the price went to \$4.20 and stayed there for several years? What does th

### Pricing and Market Power

Wet-n-Wild Indoor Water Park offers family fun year-round in the Northstar state to locals and out-of-state visitors to the nearby Mall of America. The demand for day-passes to the water park for each market segment is independent of the other market segment. The marginal cost of providing service to each visitor is \$5 per day.

### Gasoline Prices

Why is it difficult to decrease gasoline prices? Is it simply a function of supply or is it that demand is inelastic?

### Government and Marketplace

A well-known conglomerate that manufactures a multitude of noncompetitng consumer products products instituted a corporatewide initiative to encourage the managers of its many divisions to share consumer dempgraphic information. However, since the initiative was implemented, the CEO has noticed that less information is availab

### Mr. Wilson, has asked you to prepare a report for him determining the economic impact of a coffee push cart that will provide hot coffee and cappuccinos to the public. He explains to you that the cart will operate on sidewalks near the center of town from 6 a.m. to 6 p.m., and it will operate year-round. He also explains that the firm that has come up with the idea decided to start the coffee push cart in either Cleveland, Ohio, or Houston. â?¢Compare the supply and demand conditions in both locations. How many people live in each place? What is the weather like? What are the industries? How elastic will the price of hot coffee be in both locations? Be sure to consider the impact of climate. â?¢How will consumers behave to maximize their utility? What is the average income in each location? â?¢What are the costs of production both in the short run and long run for operating the push cart? â?¢Predict changes in the equilibrium price and quantity if there is a bad heat wave in Texas and if the price of coffee must be raised 10% to compensate for rising coffee bean prices. â?¢Give a recommendation to Mr. Wilson of which city to place the coffee push cart. Also, explain why you choose this city and how it will impact the economy.

Mr. Wilson, has asked you to prepare a report for him determining the economic impact of a coffee push cart that will provide hot coffee and cappuccinos to the public. He explains to you that the cart will operate on sidewalks near the center of town from 6 a.m. to 6 p.m., and it will operate year-round. He also explains that th

### Equilibrium price and Quantity Calculations

If demand is represented by Qd = 50 -.5P +.005I where I=\$50,000 and supply is represented by Qs = 100 +.4P - 2W where wages=W=\$15.00, compute the equilibrium price and quantity. where wages=W=\$15.00, compute the equilibrium price and quantity. What happens if income falls to I=\$40,000?

### Applications of Price Elasticity of Demand

In an article about the financial problems of USA Today, Newsweek reported that the paper was losing about \$20 million a year. A Wall Street analyst said that the paper should raise its price from 50 cents to 75 cents, which he estimates would bring in an additional \$65 million a year. The paper's publisher rejected the idea say

### Average Sales and Equilibrium

Ajax, Inc. has hired you to analyze the demand for its line of telecommunications devices in 35 different market areas. The available data set includes observations on the number of thousands of units sold by Ajax per month (Qd), the price per unit charged by Ajax (PX), the average unit price of competing brands (PZ), monthly ad

### Non-monetary benefits

If people desire the nonmonetary benefits of a given job more than before, then the a. demand for labor curve will shift to the right b. demand for labor curve will shift to the left c. supply of labor curve will shift to the right d. supply of labor curve will shift to the left

### Applied Problem

Rising jet fuels prices recently led most major U.S airlines to raise fare by approximately 15 percent. Explain how this substantial increase in airfares would affect the following: A. The demand for air travel. B. The demand for hotels. C. The demand for rental cars. D. The supply of overnight mail.

### Exemplify the law of demand.

In the aftermath of September 11 terrorist attacks, the quantity of sold airline tickets in 2002 fell by a large percentage when compared to 2001. During the same time period the average price for airling tickets also fell. The law of demand states that "the quantity demanded of a good varies inversely with its price. Does the

### Modifying Price to Change Revenue

Some businesses will examine their pricing structure and modify it in order to maximize revenue, either by raising or lowering the price. For some organizations, lowering prices might be an effective means for increasing revenue. Select an organization you work for or are familiar with. Could the organization you have chosen low

### Answers and Explanations to an Economics Quiz

See the attached file. Average Variable Costs and Marginal Costs Average variable costs are increasing when: 1. Marginal costs are increasing 2. Marginal costs are declining 3. Marginal costs exceed fixed costs 4. Marginal productivity is increasing. Demand for Steel When calculating the own price elasticity f

### Assess the given demand function.

Management at the Johnston Corporation estimates a demand function for its lawnmower line to be: Qk = 5-2.4*Pb+0.7*A+0.002*I+0.8*Pv Where Qk = the quantity of lawnmowers, Pb = the own price of lawnmowers produced by Johnston (\$/Unit) A = the advertising expenditures for Johnson lawnmowers (\$/ad unit in a year), I = income

### Equilibrium Price of Wheat

1. If the demand curve for wheat in the United States is P = 12.4 - QD where P is the farm price of wheat (in dollars per bushel) and QD is the quantity of wheat demanded (in billions of bushels), and the supply curve for wheat in the United States is P = -2.6 + 2QS where QS is the quantity of wheat supplied (in billions of bus

### Impact of Zero Price Items to the Cost of the Goods

Question: "Occasionally, the government offers goods and services at zero price. Explain what this does to the cost of that good, as well as the cost and price of other goods." Explain more about what is going to happen by using the demand and supply curve. Also, the other goods can be substitute and complementary goods, so

### Access Demand for Apartments and Profit Maximizing Price

1. Recent increases in rents has lead the citizens of Elmville to vote in a rent ceiling of \$1200. Assuming all rental units in Elmville are identical and the supply and demand for rental units are given by Qs = -1000 + 20P Qd = 50000 - 10P What will be the excess demand for apartments once the price ceiling is implemented?

### Income Elasticity of Demand

The demand function for gadgets is given by the following formula Q = 1,000 -10Y - 2 P + 4A where Q is quantity, Y is income, P is price, and A is advertising. Currently, Y = 20, P = 30, and A is 15 What is the income elasticity of demand?

### Determine the excess demand in an apartment market with a rent ceiling in effect.

Recent increases in rents has lead the citizens of Elmville to vote in a rent ceiling of \$1200. Assuming all rental units in Elmville are identical and the supply and demand for rental units are given by Qs = -1000 + 20P Qd = 50000 - 10P What will be the excess demand for apartments once the price ceiling is implemente

### Profit maximizing firms rarely short supply of goods and services to market. Why is this so?

For any general profit-maximizing firm with market power (i.e., a price-setting firm, such as Microsoft, Toyota, or Starbucks), why do we NOT expect to see on an ongoing basis shortages of goods or services provided by these firms? Explain briefly.

### Equilibrium Price and Quantity With/Without the Presence of Tax

Use the following supply and demand functions to answer the questions below: Qd = 20-2P, Qs = 5+3P a. Determine the equilibrium price and quantity and illustrate with a graph. b. The government imposes a tax of \$5.00. Find the new equilibrium price and quantity. c. Determine the total tax revenue earned by the governme

### Implications of widgets are emphasized.

How does an increase in the price of widgets affect the: And describe the effects in detail?: a. Demand for widgets b. Supply of widgets c. Demand for woozles if widgets and woozles are substitutes d. Demand for gadgets if widgets and gadgets are complements

### A managerial economic & business strategy is featured.

Using one of the elasticities discussed in the chapter, give an example of how you would use this information to set the price for your product in the market place. Explain one factor in detail about how shifting demand and supply curves makes market demand estimation difficult **Must be properly cited from credible source

### Calculate the equilibrium price and equilibrium quantity.

The market demand and supply functions of copper are as follows: QD = 10 -50PC + 0.3I + 1.5TC + 0.5E where: QD = quantity demanded of copper (millions of pounds) PC = price of copper (\$ per pound) I = consumer income index TC = telecom index E = expectation index QS= -86 + 90PC â?" 1.5W + 0.5T + 0.4N where: QS = q