Economics Answers

Your budget constraint for the two goods A and B is 12A + 4B = I, where I is your income. You are currently consuming more than 27 units of B. In order to get 3 more units of A, how many units of B would you have to give up?

Why can't business cycles fluctuate with the economic system? Why does it have to be the other way?

Today is his 24th birthday. He plans to retire at 65 years old and he expects to live for another 20 years afterwards. He wants an income of $30,000 per year during his retirement years, to be paid annually on his birthday (starting from his 65th birthday). He plans to save some amount at each birthday from the age 25 to 64. He thinks about saving a constant amount for the first 10 years and then increases his saving at 3% each year until the last one before his retirement. The bank provides two types of accounts. One account pays 6.9%/year compounded quarterly. The other account pays 7%/year compounded annually?
(a) What is the balance of your brother’s account right after he makes his deposit in
his saving account on his 50th birthday?

After graduating from college, you are hired by the Ford automobile company as an economic analyst. For your first project, you are asked to estimate what would happen to the sales of Ford Mustangs as a result of a change in (i) the price of a Chevrolet Camaro, (ii) the price of gasoline, and (iii) consumer incomes. You are given the following elasticities:

Price elasticity of demand for Ford Mustangs = -2.5

Cross-price elasticity between Ford Mustangs and Camaros = 1.5

Cross-price elasticity between Ford Mustangs and gasoline = -0.80

Income elasticity of demand for Ford Mustangs = 3.00

QUESTIONS:
Part 1
Suppose the price of a Camaro falls by 10%. With all else being equal, sales of Ford Mustangs would (Rise/Fall) by_____%.

Part 2
If the price of gasoline increases by 20%, the quantity of Ford Mustangs would (Rise/Fall) by_____%.

Part 3
If consumer incomes increase by 5%, the quantity of Ford Mustangs would (Rise/Fall) by ____%.

Consider the following problem: After your 8 hours a day of sleep, you have 16 hours aday to divide between leisure and study. Let leisure hours be the X variable and studyhours be the Y variable. Plot the straight-line relationship between all combinations of X and Y on a blank piece of graph paper. Be careful to label the axes and mark the origin

the marriage between economics and mathematics has been dismal to say the least according to some proponents, but yet other proponents applaud this marriage as the marriage of the century.Propose your standpoint to this divide.

Suppose that price of a pair of shoes rises from $160 to $180. As a result, there are now 5,800 pairs of shoes demanded versus 7,000 as before.
Calculate price elasticity of demand for these shoes. USE MIDPOINT FORMULA.

From the date provided, calculate the Price elasticity (Arc) against all price levels.


Hint: You can price as average price (P1+ P2/2) and quantity as average quantity (Q1+Q2/2).

During the past year, Ironside sold 15 million square yards (units) of carpeting at an average wholesale price of $7.75 per unit. This year, income per capita is expected to surge from $17,250 to $18,750 as the nation recovers from a steep recession. Without any price change, Ironside’s marketing director expects current-year sales to rise to 25 million units.


A. Calculate the implied income arc elasticity of demand. B. Given the projected rise in income, the marketing director believes that the current volume of 15 million units could be maintained despite an increase in price of 50¢ per unit. On this basis, calculate the implied arc price elasticity of demand. C. Holding all else equal, would a further increase in price result in higher or lower total revenue?

The Creative Publishing Company (CPC) is a coupon book publisher with markets in several southeastern states. CPC coupon books are either sold directly to the public, sold through religious and other charitable organizations, or given away as promotional items. Operating experience during the past year suggests the following demand function for CPC’s coupon books:

Q = 5,000 – 4,000P + 0.02Pop + 0.5I + 1.5A

Where: Q is quantity, P is price ($), Pop is population, I is disposable income per household ($), and A is advertising expenditures ($).


A. Determine the demand faced by CPC in a typical market in which P = $10, Pop = 1,000,000 persons, I = $30,000, and A = $10,000. B. Calculate the level of demand if CPC increases annual advertising expenditures from $10,000 to $15,000. C. Calculate the demand curves faced by CPC in parts A and B.