Analyzing the effects of non-price factors on demand
Not what you're looking for?
1). Consider the demand for computers. For each of the following, state the effect on demand:
a.An increase in consumer incomes.
b.An increase in the price of computers.
c.A decrease in the price of internet service providers.
d.A decrease in the price of semiconductors.
e.It is October, and consumers expect that computers will go on sale just before Christmas.
2). The demand curve is given by
Qd = 500 - 5Px + 0-5 I + 10Py - 2Pz
Where
Qd = quantity demanded of good X
Px = price of good X
I = consumer income, in thousands
Py = price of good Y
Pz = price of good Z
a.Based on the demand curve above, is X a normal or an inferior good?
b.Based on the demand curve above, what is the relationship between good X and good Y?
c.Based on the demand curve above, what is the relationship between good X and good Z?
d.What is the equation of the demand curve if consumer incomes are $30,000, the price of good Y is $10, and the price of good Z is $20?
e.Graph the demand curve that you found in (d), showing intercepts and slope.
f.If the price of good X is $15, what is the quantity demanded? Show this point on your demand curve.
g.Now suppose the price of good Y rises to $15. Graph the new demand curve.
Purchase this Solution
Solution Summary
Solution describes the effect of changes in various non-price factors on demand. Solution to second problem predicts nature of good and related good based upon given demand function.
Solution Preview
Please refer attached file for complete details. Graphs may not print here.
Solution:
1). Consider the demand for computers. For each of the following, state the effect on demand:
a. An increase in consumer incomes.
An increase in income will increase the consumption of normal goods, demand will increase. Demand curve will shift towards right
b. An increase in the price of computers.
It is a movement along the curve, qunatity demanded will decrease.
c. A decrease in the price of internet service providers.
Internet service is a complementary good for computers. An decrease in price of internet service will increase the demand for ...
Education
- BEng (Hons) , Birla Institute of Technology and Science, India
- MSc (Hons) , Birla Institute of Technology and Science, India
Recent Feedback
- "Thank you"
- "Really great step by step solution"
- "I had tried another service before Brain Mass and they pale in comparison. This was perfect."
- "Thanks Again! This is totally a great service!"
- "Thank you so much for your help!"
Purchase this Solution
Free BrainMass Quizzes
Basics of Economics
Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.
Economic Issues and Concepts
This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.
Pricing Strategies
Discussion about various pricing techniques of profit-seeking firms.
Elementary Microeconomics
This quiz reviews the basic concept of supply and demand analysis.
Economics, Basic Concepts, Demand-Supply-Equilibrium
The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.