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2.2 Suppose South African government decides to impose a tax on the chickens that are imported from the United States. Use a diagram to show and explain the welfare cost that will result from the imposition of import tariff. [06]
2.3 The demand function for good (X) is given by Qx= 100 – 0.7Pz + 1.5Y – 0.3Px Where: Qx = Quantity demanded for good X Px = Price of good X Pz = Price of good Z Y = Level of income
Calculate price elasticity of demand, income elasticity of demand and cross price elasticity of demand when Px = R80, Pz = R150 and Y = R300. Thoroughly interpret your results.
Suppose the market model is described by the following demand and supply functions: Qd= 200-2P+ 4i and Qs= -200 + 3P where i =50 Answer the following questions: a) Calculate the equilibrium price (P) and quantity (Q) and indicate your answers on the graph. [03] b) If the market demand decreases by 50% what will be the new clearing price and quantity for this market? [03] c) Indicate the effect of the changes in (b) on a graph and explain what will happen to market price and quantity.
How to solve higher interest rate by using classical and keneysian theory
- Maria can read 20 pages of economics in an hour. She can also read 50 pages of sociology in an hour. She spends 5 hours per day studying.
- Draw Maria’s production possibilities frontier
- for reading economics and sociology.
- What is Maria’s opportunity cost of reading
- 100 pages of sociology?
Suppose the price elasticity of demand for heating oil is 0.2 in the short run and 0.7 in the long run.
a. Ifthepriceofheatingoilrisesfrom$1.80to$2.20
per gallon, what happens to the quantity of heating oil demanded in the short run? In the long run? (Use the midpoint method in your calculations.)
You are the curator of a museum. The museum is running short of funds, so you decide to increase revenue. Should you increase or decrease the price of admission? Explain.
1. Greater consumption of alcohol leads to more motor vehicle accidents and, thus, imposes costs on people who do not drink and drive.
a. Illustrate the market for alcohol, labeling the demand curve, the social-value curve, the supply curve, the social-cost curve, the market equilibrium level of output, and the efficient level of output.
b. On your graph, shade the area corresponding to the deadweight loss of the market equilibrium. (Hint: The deadweight loss occurs because some units of alcohol are consumed for which the social cost exceeds the social value.) Explain.
Suppose the government cuts income that show in the IS-LM model the impact of the tax cut under two assumptions
(1) the government keeps interest rates constant through an accommodating monetary policy
( 2 )The money stock remains unchanged explain the difference in results
Given the on-going pandemic, the sale of Willis cleaning products jumped 15% to Rs. 425 million and increased income by 28%. Household sales surged 7% and profits rose 65% as both prices and demand increased and a germ-averse public stocked up. Assume yourself as an ambitious manager of Willis cleaning products, who wants to use these changes in the 4th quarter to calculate the own-price elasticity of demand. You have the data on changes in price and changes in quantity sold during the quarter.
Required: 1. What would be the main challenge they would face in calculating a reliable estimate of elasticity? 2. Suppose for the 3rd quarter this challenge did not exist, rather the challenge was one of data availability. All the manager knows, a few minutes before a quickly called meeting to discuss 3rd quarter results, is that the price of a pack of 35-count Clorox Wipes increased by 12% while revenue from those wipes increased by 5%. Calculate the own-price elasticity of demand for Clorox Wipes in this quarter.
Consider the following general demand and supply functions: 𝑄𝐷 = 1800 − 8𝑃 + 2𝑀 + 16𝑃𝑅 𝑄𝑆 = 50 + 12𝑃 − 20𝑃𝐵 + 19𝐹 where QD and QS are quantities demanded and supplied, respectively, P is price of the good, M is household income, PR is price of a demand-related good, PB is price of a supply-related good, and F is number of firms in the industry
