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Demand & Supply

Price Fluctuations of Gasoline

We are all familiar with fluctuating prices of gasoline at the pump. Why does this happen? Research the recent history of gasoline pricing in your area, and attempt to relate any fluctuations you observe to documented supply and demand factors, as outlined in our book. Be sure to cite any references used. Why do the gasoline

Predict The Annual Number of VCRs Sold

Suppose that the current market price of VCRs is $300, that average consumer disposable income is $30,000, and that the price of DVD players (a substitute for VCRs) is $500. Under these conditions annual U.S. demand for VCRs is 5 million per year. Statistical studies have shown that for VCRs the own-price elasticity of demand is

Examining market equilibrium price: Widget industry example

The widget industry in Springfield is competitive, with numerous buyers and sellers. Consumers don't differentiate among the various brands of widgets (no product differentiation). The industry demand curve is given by: Qd = 998 - 5Pw + 4 Y - 6Pg The industry supply curve is given by: Qs = +15Pw - 3 Wage Where Pw r

Effect of income tax reduction is analyzed.

Suppose that the current market price of VCRs is $300, that average consumer disposable income is $30,000, and that the price of DVD players (a substitute for VCRs) is $500. Under these conditions annual U.S. demand for VCRs is 5 million per year. Statistical studies have shown that for VCRs the own-price elasticity of demand is

Predicting Demand

Question 1 Use the terms "rising", "falling", or "staying the same" (but without the quotation marks) when filling in the following blanks. When the average total cost curve is "U" shaped, the average total cost curve is ________if the marginal cost curve is below it and __________ if the marginal cost curve is above it. Whe

State Medicaid Agency

Please help with the following economics problem. The state Medicaid agency has set a rate of $5.50 per visit for all Medicaid enrollees who visit a physician. Each physician also has private paying patients. The demand curve for each physician can be characterized as follows, and physicians can be regarded as individual mon

Equilibrum Price

Suppose that both the equilibrium price and quantity of golf clubs rise. Which of the following explanations would best explain this outcome? a. A decrease in demand for golf clubs with no change in supply. b. An increase in supply of golf clubs with no change in demand. c. A decrease in demand for golf clubs and a decrease

Calculate optimal profits of each firm.

Two firms produce differentiated products and set prices to maximize their individual profits. Demand functions for the firms are given by Q1 =64 -4P1 +2P2 Q2 =50 -5P2+ P1 where P1, P2, Q1, Q2, refer to prices and outputs of firms 1 and 2 respectively. Firm 1â??s marginal cost is $5 while firm 2â??s marginal cost is $

Relationship between interest rates and the demand for money

About the relationship between interest rates and the demand for money I have to say that it is missing a factor called confidence. Many economists have said before that if the rate declined, the demand for money will rise and the contrary would be true. However, real life even if rates declined to historically low rates, if the

Draw a demand curve

Suppose you are in charge of a toll bridge that essentially cost free. The demand for bridge crossings Q is given by P = 60 - 2Q. 1. Draw a demand curve for bridge crossings 2. How many people would cross the bridge if there was no toll?

Graph supply and demand schedules and equilibrium

Suppose the market demand for pizza is given by Qd=300-20p and the market supply for pizza given by Qs=20p-100, where P=price (per pizza). Graph the supply and demand schedule for pizza using $5 through $15 as the value of p. In equilibrium, how many pizzas would be sold at what price?

Preparing Journal Entries

Preparing journal entries Prepare journal entries for each of the following selected transactions: a. On January 13, Chico Chavez opens a landscaping business called Showcase Yards by investing $70,000 cash along with equipment having a $30,000 value. b. On January 21, Showcase Yards purchases office supplies on credit

Cost Cutting Strategies

Describe a market situation in which the operating company faces economic difficulties and the need to cut costs. What cost cutting strategies might the operating company use to remain profitable? What would be the benefits and drawbacks of each?

Price, Quantity, and Demand

1. Explain what happens to price and quantity of milk when the following events occur: a. An advertising campaign highlights scientific studies that find drinking milk can help reduce weight gain. b. There is a mad cow disease epidemic. c. The price of milk decreases. d. The government decides to im

Microeconomics

Suppose you are a painter, and the price of a gallon of paint increases from $3.00 a gallon to $3.50 a gallon. Your usage of paint drops from 35 gallons a month to 20 gallons a month. Perform the following: 1. Compute the price elasticity of demand for paint and show your calculations. 2. Decide whether the demand for paint is

Economic decision making in business

Why do you believe that it is important for managers to understand both short run and long run supply and demand? Cite one hypothetical or real life example that illustrates your response. Under what circumstances would it be appropriate to resort to plant or company closings or layoffs? what is a good guideline to follow and

Price/Output Equilibrium

The domestic sewing machine manufacturing industry is highly concentrated with only three active firms. Annual output and the marginal cost of production for "free arm" models produced by each company are as follows: Marginal Cost Annual Output (million) Frantic Frasier (F) Neurotic

Velocity of Money Circulation

In a country the velocity of circulation is 4 and money supply equals $100,000,000. What is the nominal GDP in this country equal to? a. $400,000,000 b. $250,000 c. $100,000,000 d. $600,000,000

Applied Math on determining price elasticity of demand

The marketing team for a restaurant wants to determine the price elasticity of demand coefficient for its steak dinner. It priced its dinner at different price points in local restaurants to see how many would be sold at different prices. The following is the result of the price trials: Price Quantity $15 1000

Supply: Production, Costs, and Profits

1. Give a brief summary of economic costs. In the short-run, why might a firm still operate even when there is a loss. 2 Explain the law of diminishing returns.

Demand and Supply Analysis: Calculating Equilibrium Price

Suppose the supply of wine by domestic firms is QSD = 5 + P and the supply of wine by foreign firms is QSF = 5 + P. The domestic demand for wine is QD = 40 - P. a. In the absence of a quota, what is the equation for the total supply of wine? Show your work. b. What are the equilibrium price and quantity of wine? Show your

Total Increase or Decrease in the Money Supply

Suppose the Fed decides to buy $1 billion in Treasury bonds from the public. Assume that the reserve requirement is 10%. a.What happens to the interest rate and the money supply? b.What is the total increase or decrease in the money supply which could result from the Fed's action? Explain your answer.

Demand Problems Are Solved

Here is some data on the demand for marshmallows: Price Quantity $10 100 $ 8 300 $ 6 700 $ 4 1300 $ 2 2200 (a) Is demand elastic or inelastic in the $6-$8 price range? How do you know? (b) If the table represent

Housing decision

Philip's demand curve for housing is shown in the figure below. (Assume that quantity of housing is measured simply by the number of square metres. Other aspects of quality are ignored.)The market price of housing is P1; Philip can purchase as much housing as he desires at that price. Alternatively, Philip can live in public hou

The profit maximization chapter in Nicholson is explained.

1. John's Lawn Mowing Service is a small business that acts as a price taker (MR = P). The prevailing market price of lawn mowing is $20 per acre. John's costs are given by total cost = .1q^2 + 10q + 50 where q = the number of acres John chooses to cut a day a. How many acres should John choose to cut in order to maximi