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A bakery is located just up the road from Jane’s home. On Saturday mornings, she, like many others, buys her bread there. Saturday morning, predictably, is the busiest time of the week for the store, which necessitates the hiring of additional employees. On weekdays, only one assistant provides services to the customers. But because of the busy scheduling on Saturdays, five assistants are brought in to assist. The problem is the additional five are not able to serve five times as many customers. Labour is faced with diminishing return and some factors of production in the bakery shop are fixed. - The shop size is fixed. Saturday mornings at the shop is terrible for customers because of overcrowding. Assistants sometimes had to wait while customers squeezed past each other.
1. As an economist and a friend to Jane, what advice will you give to the baker?
2. Explain the three (3) stages of production to the baker.
3. Explain the forecast of the demand for bread when price is increased
Michaels income declines and as a result, he buys more bananas. Is banana an inferior or normal good. What happen to michaels demand curve for bananas.
An increase in the demand for notebooks raises the quantity of notebooks demanded but not the quantity supplied. Is this statement true or false. Explain.
Pepsi and burger are complements because they are often enjoyed together. When the price of pepsi rises, what happens to the supply, demand, quantity supplied, quantity demanded, and the price in the market for burgers.
Makeup an example of a monthly demand schedule for pasta and graph the implied demand curve. Give an example of something that would shift this demand curve, and briefly explain your reasoning. Would a change in the price of pasta shift this demand curve
Mary is a smart entrepreneur in her primary school. She sells ball points to her fellow school mates. At a price of $2.00 each, she sells 100. At a price of $1.50 each, she sells 300.
(i) Is Mary’s demand elastic or inelastic over this price range? (5 marks)
(ii) If demand had the same elasticity for a price decline from $1.50 to
$1.00 as it does for the decline from $2.00 to $1.50, would cutting the price
from $1.50 to $1.00 increase or decrease Mary’s total revenue?
For the following market demand curve:
A. Find marginal buyer’s WTP at Q = 15.
B. Find CS for P = $35.
C. Suppose P decreases to $10. How much will CS increase due to…
● Buyers who enter the market
● Existing buyers paying lower price.
b. Calculate the coefficient of price elasticity of demand from the given data for point A to B.
Point Quantity Price
A 4 7
B 3 8
a. Analyse the cross price elasticity of demand for wheat and rice when a change in the price of wheat from Rs.70 to Rs. 90 results in a change in the quantity demand for wheat from kg 3000 to kg 5000 in the market. Interpret the value of the coefficient.
Lorna works so 30 hours per week and is paid $40 per hour. When working Lorna experiences disutility of $5 per hour. If he becomes unemployed it will take Lorna 12 weeks to find a new job. When unemployed, Lorna receives $300 per week when unemployed. The value of Lorna’s reservation wage is equal to how many dollars per hour?
