stimated market demand for good X is Q=8,000-25P-0.12M-30P9 where is the estimated number of units of good X demanded, Pis the price of the good, Mis income, and is the price of related good G. (All parameter estimates
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- Income Effects depend on the income elasticity of demand for each good limit you buy. If one of the goods you buy has a negative income elasticity, that is, it is an inferior good, what must be true of the income elasticity of the other good you buy?Which of the following combinations best describes the effects.of a consumer income increase on the market demand for a f1ormal and aninferior good? Demand increases for the normal good, and denand decreases for the nfenor good. b. Demand increases for the normal good, and demand does not change for the inferior good. c. Demand decreases for the normal good, and demand decreases for the inferior good.The price elasticity of demand is more likely to be inelastic if Othere are a lot of substitutes available. O the price of the product is a large fraction of income. Othere is a long time frame involved. O the product is a necessity.
- Assume your demand for “Ipek su” water increases from 1 bottle to 3 when “Sirab su”increases the price per bottle from 18 azn to 25 azn.a) Calculate cross price elasticity of “Ipek su” water and comment on it.b) Based on your answer in a) comment whether the two goods are substitutes or complements.Assume when Sirab increases the price for a bottle of water from 18 to 25 anz, thedemand for Sirab decreases from 2 bottles to 1 bottle.c) Is the demand for Sirab price elastic?d) How will the revenue of a company producing Sirab change?Suppose the own price elasticity of demand for good X is -3, its income elasticity is 1, its advertising elasticity is 2, and the cross-price elasticity of demand between it and good Yis -4. Determine how much the consumption of this good will change if: Instructions: Enter your responses as percentages. If you are entering a negative number, be sure to use a (-) sign. a. The price of good X decreases by 5 percent. percent b. The price of good Yincreases by 10 percent. percent c. Advertising decreases by 3 percent. percent d. Income increases by 4 percent. 4 percent|Unit 3 Midterm Economics A docs.google.com/forms/d/e/1FAlpQLSfDzcagnpq9EUKBs3AWMb. a change in quantity demanded for one product or service causes a change in simple demand for a related product or service. * In 2. O Elasticity of Demand O Cross Elasticity of Demand O Diminishing Marginal Utility O Cost-Benefit Analysis O All of These O None of These The rules of the price system operate in all markets of a capitalist/market economy. The market where consumers earn income Market. by selling resources to business resources is called O Consumer
- Suppose the own price elasticity of demand for good Xis -4, its income elasticity is -2, its advertising elasticity is 4, and the cross-price elasticity of demand between it and good Yis 2. Determine how much the consumption of this good will change if: Instructions: Enter your responses as percentages. Include a minus (-) sign for all negative answers. d. Income increases by 4 percent. percentSuppose the own price elasticity of demand for good X is -2, its income elasticity is -1, its advertising elasticity is 2, and the cross-price elasticity of demand between it and good Yis -3. Determine how much the consumption of this good will change if: Instructions: Enter your responses as percentages. Include a minus (-) sign for all negative answers. a. The price of good X decreases by 4 percent. percent b. The price of good Yincreases by 10 percent. percent c. Advertising decreases by 3 percent. percent d. Income increases by 2 percent. percentIncome effects depend on the income elasticity ofdemand for each good that you buy. If one of the goodsyou buy has a negative income elasticity, that is, it is aninferior good, what must be true of the income elasticityof the other good you buy?
- Using the supply and demand equations given below: Demand Qd = 25 – 2PSupply Qs = 1 + P If the price falls from $8 to $7:a. Compute for the own price arc elasticity of demand. Provide an economic interpretationof your computed value (this is different from what is asked next) and classify the good according tothe type of elasticity. b. Compute for the price elasticity of supply. Provide an economic interpretation of yourcomputed value and classify the good according to the type of elasticity. 1. What is the relationship between total revenue and own-price elasticity of demand? 2. Illustrate a situation when the producer of a good will have a greater tax incidence than a consumer.What does elasticity have to do with tax incidence?i FS 16 1/2 Problem 1 The demand for good x is given by 100% 10 Research shows that the prices of related goods are given by Py56,500 and P2 $100, while the average income of individuals consuming this product is M-$70,000. a. Indicate whether goods Y and Z are substitutes or complements for good X, b. Is X an inferior or a n a normal good? How many units of good X will be purchased when Px-55,230? d. Determine the demand function and inverse demand function for good X. Graph the demand curve for good X. F6 EC650 Managerial Economics Module 2 Homework Problem 2 Use the accompanying graph to answer these questions. A 0=6,000- a. Suppose demand is D and supply is S. If a price ceiling of $6 is imposed, what are the resulting shortage and full economic price? b. Suppose demand is D and supply is S. If a price support of $12 is imposed, what is the resulting surplus? What is the cost to the government of purchasing any and all unsold units? c. Suppose demand is D and supply is Sº so that…When the price of goods X increases by 20% and the quantity of demand decreases by 30%, the demand for the goods is inelasticTrue or false?