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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 equilibrium price and quantity of
motor car? Answer with graph.
i. A technological advance in the methods of producing tires.
ii. A decline in the number of firms in the motor car industry.
iii. An increase in the prices of rubber used in the production of tires.
iv. The expectation from consumer point of view that the price of motor car will be
lower in the future than currently.
v. The granting of a 50-cent-per-unit subsidy for each motor car produced.
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 demand for small automobiles such
as the Mini-Cooper and Smart car? Answer with graph.
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.
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.
How will each of the following changes in demand and/or supply affect equilibrium price and equilibrium quantity in a competitive market; that is, do price and quantity rise, fall, or remain unchanged, or are the answers indeterminate because they depend on the magnitudes of the shifts? Use supply and demand to verify your answers.
a. Supply decreases and demand is constant.
b. Demand decreases and supply is constant.
c. Supply increases and demand is constant.
d. Demand increases and supply increases.
e. Demand increases and supply is constant.
f. Supply increases and demand decreases.
g. Demand increases and supply decreases.
h. Demand decreases and supply decreases.
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?
a) Explain three limitations of the linear regression analysis
Consumer surplus indicate that
