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Suppose the demand and supply curves for a product is given by 𝑄 = 500 − 2𝑃 𝑄 = −100 + 3𝑃 a) Which is the supply curve and why? b) Graph the demand and supply curves. c) Compute the equilibrium price and quantity d) If the current price is 100, what is the quantity demanded and quantity supplied? How would you describe this situation and what would you expect to happen in this market? e) Suppose that the demand changes to 𝑄 = 600 − 2𝑃. Find the new equilibrium price and quantity and show this on your graph.
explain the backward bending supply curve of labour through the price effect method
If the offer curve of country A is constant, but the country B is shifts right ward due to increase income of country B. What is Equilibrium term of trade
1. Explain in words;
a) What the budget line is.
b) Suppose we have two goods. The price of good one is 10 and the price of good two
is 15. The income is 30. Construct a diagram, with the quantities on the X and Y
axes and draw a budget line in the diagram.
c) How do the prices and do income affects the shape of the graph? What happens if the
price of one good rises? What happens if income increases?
d) State marginal rate of transformation in words.
e) Calculate MRT in question (b).
2. Given utility (𝑥, 𝑦) = √𝑥
√𝑦
, Px = 2, Py = 5 and M = 400, find:
a) The demand equation for X and Y.
b) The utility maximizing levels of X and Y.
c) The maximum utility
d) The MRSx,y at the optimum level
For each of the following events, describe in words what happens to the supply, demand, quantity supplied, and quantity demanded in the market for new cars. a. The Raju Auto workers get a large raise. b. A new technology is introduced in the factory. c. The government subsidizes bus tickets resulting in a large reduction in the cost of a bus ticket. d. Real incomes grow and new cars are a normal good. e. There is machinery break down in the industry.
For each of the following events, describe in words what happens to the supply, demand, quantity supplied, and quantity demanded in the market for new cars. a. The Raju Auto workers get a large raise. b. A new technology is introduced in the factory. c. The government subsidizes bus tickets resulting in a large reduction in the cost of a bus ticket. d. Real incomes grow and new cars are a normal good. e. There is machinery break down in the industry.
What effect will each of the following have on the demand for small automobiles such
as the Mini-Cooper and Smart car? Answer with graph.
i. Small automobiles become more fashionable.
ii. The price of large automobiles rises (with the price of small autos remaining the
same).
iii. Income declines and small autos are an inferior good.
iv. Consumers anticipate that the price of small autos will greatly come down in the
near future.
v. The price of gasoline substantially drops.
What effect will each of the following have on the supply of auto tires?
a. A technological advance in the methods of producing tires.
b. A decline in the number of firms in the tire industry.
c. An increase in the prices of rubber used in the production of tires.
d. The expectation that the equilibrium price of auto tires will be lower in the future than currently.
e. A decline in the price of the large tires used for semi trucks and earth-hauling rigs (with no change in the price of auto tires).
f. The levying of a per-unit tax on each auto tire sold.
g. The granting of a 50-cent-per-unit subsidy for each auto tire produced.
United States simultaneously limits imports of ethanol for fuel purposes and provides incentives for the use of ethanol in gasoline, which raise the price of ethanol by about 25 per cent relative to what it would be otherwise. We do, however, have free trade in corn, which is fermented and distilled to make ethanol and accounts for approximately 55 per cent of its cost. What is the effective rate of protection on the process of turning corn into ethanol?
Consumer surplus indicate that
