Suppose that the price-demand and the price-supply equations are given respectively by the following: p= D(x) = 40 - 0.2x, P = S(x) = 27.5 +0.001x² (a) Determine the equilibrium price p and the equilibrium quantity . (b) Calculate the total savings to buyers who are willing to pay more thar the equilibrium price p. (c) Calculate the total gain to sellers who are willing to supply units less than the equilibrium price p.
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- Suppose you learned that the price elasticity of demand for wheat is 0.7 between the current price for wheat and a price 2 higher per bushel. Do you think that farmers collectively would try to reduce the supply of wheat and drive the price up 2 higher per bushel? Explain your answer. Assuming that they would try to reduce supply, what problems might they have in actually doing so?For each of the determinants of demand in Equation 2.1, identify an example illustrating the effect on the demand for hybrid gasoline-electric vehicles such as the Toyota Prius. Then do the same for each of the determinants of supply in Equation 2.2. In each instance, would equilibrium market price increase or decrease? Consider substitutes such as plug-in hybrids, the Nissan Leaf and Chevy Volt, and complements such as gasoline and lithium ion laptop computer batteries.1. The weekly demand (Qd) and supply (Qs) functions for a good X are given by:-Qd = 1000 – 5pQs = -400 + 15p, where P = Price per unit (R)(i) Draw the demand and supply curves on a graph and find the equilibrium priceand quantity (ii) If the demand function changes to 1200 – 5P, show the changes to part (i)above. (iii) Suppose a subsidy of R40 per unit is subsequently granted to producers ofgood X. Determine the new equilibrium price and quantity. (b) Use suitable examples to explain the likely effects of a price ceiling. (c) What do you understand by the ‘Substitution and Income effects’ of a change inprice of a good. (d) Elaborate on the factors influencing Price Elasticity of Demand (PED) and PriceElasticity of Supply (PES) of a good. 2. (a) Explain the concepts of Price Elasticity of Demand (PED), IncomeElasticity of Demand (YED) and Cross Elasticity of Demand (CED)(b) To what extent can PED be important to:-(i) a government, (ii) managers of hypermarkets ‘3. (a) Compare the…
- Suppose the coffee market in the US is given by the following equations for supply and demand: Qs = 9+0.5p Qp = 12 – p where Q is the quantity in millions of tons per year and p is the price per pound. (a) Calculate the equilibrium price and quantity of coffee. (b) At the equilibrium price, what is the price elasticity of demand? (c) Suppose a tax of $0.75 is imposed on coffee producers. Calculate the new equilibrium price and quantity. What is the amount of the tax burden on consumers (hint: by how much has the price per pound consumers pay change?).8. Assume that the demand for films is given by Q = 45 − 2P and the supply is given byQ = 15 + P. What are the equilibrium price and quantity of films?(a) P = 10 and Q = 25(b) P = 12 and Q = 21(c) P = 12 and Q = 15(d) P = 25 and Q = 10(e) None of the aboveAssuming an increase in Demant and decrease in Supply, which of the following statements is TRUE? The price of the good will decrease. The quantity of the good will definitely decrease. The price of this good will definitely increase. There will be a permanent shortage of this good. The new equilibrium quantity may increase, decrease, or stay the same. A surplus of this good will result from these changes in Supply and Demand. What new equiLibrium quantity will result depends on the relative magnitude of the changes and the shapes of the Demand and Supply curves. We cannot determine what will happen to price.
- 6) The quantity demanded of a certain brand of smart phone is 2000 per week when the unit price is $84. For each decrease in the unit price $5 below $84, the quantity demanded increases by 50 units. The supplier will not market any of the smartphones if the unit price is $60 or less, but the supplier will market 1800 per week if the unit price is $90. The supply and demand equations are known to be lineara) Find the demand and supply equationsb) Find the equilibrium quantity and priceThe following table shows the weekly demand and supply in the market for ice cream in Detroit. dy Tools Price Quantity Demanded Quantity Supplied (Dollars per gallon of ice cream) (Gallons of ice cream) (Gallons of ice cream) 4 2,000 200 Tips 1,600 600 12 1,200 800 Tips 16 800 1,200 20 400 1,800 כ On the following graph, plot the demand for ice cream ușing the blue point (circle symbol). Next, plot the supply of ice cream using the orange point (square symbol). Finally, use the black point (plus symbol) to indicate the equilibrium price and quantity in the market for ice cream. g Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically. 24 Demand 20 16 Supply 12 MacBook Air per gallon of ice cream)The diagram to the right illustrates a hypothetical demand curve representing the relationship between price (in dollars per unit) and quantity (in 1,000s of units per unit of time). The area of the triangle shown on the diagram is $ (Enter your response as an integer.) (D) Price (dollars per unit) 100- 90- 80- 70- 65 60- 50- 40- 30- 20- 10- 0- 39 :25 51 10 20 30 40 50 60 70 80 90 Quantity (1,000s of units per unit of time)
- Question # 2 A) The recent statement given in October 2020 by French President undermined the sentiments of the Muslims all around the world. The Muslims of Pakistan decided to record their protest by boycotting French products. A recent survey shows that the shunning of French products has bought about 35 percent decrease in the sales within a month. Suppose, in September 2020, the market for Garnier hair color a French product was at equilibrium with an equilibrium price 1050 and equilibrium quantity of 12,000 in Pakistan. Analyze the impact of a boycott on the demand of Garnier hair color for the month of October 2020 in Pakistan and illustrate it graphically. Also, explain why or why not the demand has changed? B) Consider a market for Tea a normal good in Karachi. You are supposed to analyze and discuss the effect on the equilibrium output and the price in the Tea market in Karachi for the October, 2020 after the following changes (Other things held constant). In each case,…1. Suppose the demand for and supply of one-bedroom housing units in Nairobi’s Westlands area can be represented by the following linear functions:Qd =18,200–40P and Qs =–2,200+20PWhere Qd, Qs = Number of housing units in thousands, P = Price in US dollars.a) Determine the market equilibrium price and quantity b) Suppose the government decides to subsidize the cost of construction one-bedroom houses in the area at US$20.00 per housing unit. Determine the equilibrium outcome after the subsidy, and show how the benefit is shared between tenants and landlords. How much will the subsidy costthe government?c) Graphically show your results using well labeled demand and supply curvesSuppose the demand for bicycles is given byQp = 10,000P- and the supply of bicycles is given by Qs = 0.01P3. (a) Using calculus and the given supply and demand curves, find mathematical expressions for the elasticities of demand and supply as a function of the price. Use these expressions to demonstrate that both curves have constant elasticity along their entire length. (b) Find the equilibrium price and quantity in this market mathematically.