Microeconomics Answers

Suppose that business travelers and vacationers

have the following demand for airline tickets

from New York to Boston:

Quantity Demanded Quantity Demanded

Price (business travelers) (vacationers)

$150 2,100 tickets 1,000 tickets

200 2,000 800

250 1,900 600

300 1,800 400

a. As the price of tickets rises from $200 to

$250, what is the price elasticity of demand

for (i) business travelers and (ii) vacationers?

(Use the midpoint method in your

calculations.)

b. Why might vacationers have a different

elasticity from business travelers?

Assume that you are from any of the following family how can you utilise the limited resources to fulfill your needs.

A.family farm

B.petty shopper

C.flower vender

The Efficient Software Store had been selling a spreadsheet program at a rate of 100 per month and a graphics program at the rate of 50 per month. In September 2012, Efficient's supplier lowered the price for the spreadsheet program, and Efficient passed on the savings to customers by lowering its retail price from $400 to $350.The store manager then noticed that not only had sales of the spreadsheet program risen to 120, but also the sales of the graphics program increased to 56 per month. Explain what has happened. Use both arc price elasticity and arc cross-elasticity measures in your answer.

in short run equation TC=200+55q find fixed cost

1)   With regard to achievement of stability of equilibrium in an isolated market assume that the market for string beans is found to have a lagged supply response such that the demand and supply function may be written as

D_t = aP_t + b

S_t = AP _t-1 + B

Required: Derive the conditions for dynamic stability of equilibrium

1. Suppose that the demand for crude oil is given by Qd =85- 0.4P, where Qd is the quantity demanded in millions of barrels per day and P is the price per barrel in dollars. Suppose also that the supply of crude oil is given by Qs= 55 + 0.6P.

a) Calculate equilibrium price and quantity in this Market

b) Graph the demand curve and the supply curve

c) Calculate the demand for crude oil and the supply for crude oil if the market price is $ 15.00 per barrel. Explain your answer.

d) Calculate the demand for crude oil and the supply for crude oil if the market price is $50.00 per barrel. Explain your answer.

2. What type of relationship exists between the firm’s average physical product curve and the average cost curve in the short- run?

Why have Canadian house prices increased so quickly this year? And what is a possible solution to slow down house prices to make homes more affordable? Make sure to use concepts from our course in your explanation.

As the price of tickets rises from $200 to

$250, what is the price elasticity of demand

for (i) business travelers and (ii) vacationers?

(Use the midpoint method in your

calculations.)

b. Why might vacationers have a different

elasticity from business travelers?