Economics Answers

Q. Consider the demand equation, Qx = 150 - PxP0 where the subscripts x and o refer to two different goods.
a. For this equation, write the expression for the point price and cross elasticities of demand as function of Px and P0.
b. what is the relationship between the price and cross elasticities ?

Write-Right, a vertically integrated firm produces both paper and writing tablets. The demand for tables is given by PT = 1.00 – 0.001Q where Q is the quantity of tablets. The marginal cost of producing the paper necessary for tablet is MCP = 0.20 + 0.001Q It costs the firm $0.10 to make the paper into a writing tablet. If there is no external market for the paper, what transfer price should top management set for the paper?

Fiscal policy objectives in South Africa

Suppose the government increases its spending and that net exports increase. In two or three sentences, explain how these actions affect economic performance.

1 Consider two markets; the market for petrol in Australia and the market for used Holden Commodores in Australia. For the purposes of this question please regard Holden Commodores as large cars that consume a lot of petrol. Suppose that a war in the Middle East causes the price of crude oil to increase (crude oil is the major input used to produce petrol). To answer this question, draw two demand and supply diagrams (as specified below) and for each diagram please provide a written explanation. For each diagram you must label which market it refers to, show clearly how the demand and/or supply curve shifts, and clearly show how the equilibrium price changes.
(a) First, draw a diagram showing what happens in the Australian petrol market (4 marks).
(b) Then, draw another diagram showing what happens in the Australian used (second-hand) Holden Commodore market (6 marks). Hint: Think carefully what happens to the supply curve as well as what happens to the demand curve.

Suppose the market for coffee is currently in equilibrium at price RM3.00. An early frost in coffee-growing nations decreases the supply of coffee. Use supply and demand analysis to forecast the impact of freeze on the market equilibrium price and quantity of coffee.

The demand equation is estimated to be 50 – 3P + 2Po , where Po is the price of some other good. Assune the average value of P is $ 3 and the average value of Po is $ 6.

a. what is the price elasticity at the average values of P and Po? how should the price of the good be changed to increase total revenues ?
b. what is the cross elasticity at the average values of P and Po? what is the relationship between the two goods?
c. if the equation is correctly estimated, is the good inferiod, a necessity, or a luxury? Explain

Q: Given the demand equation, Q = 12,000 - 10P2.
a. For this equation, write the expression for the point price elasticity of demand as a function of P
b. over what range of prices is the demand inelastic ?

. If the government sets a price floor in the market what is the difference between the quantity demanded versus quantity supplied? What do we call this?

The demand equation for a product is given by
P=30-0.1q2 .
(a)At what point price is demand inelastic?
(b)at what price is demand unitary elastic