6. Suppose demand and supply a. What are the equilibrium quantity and price in this market? b. Determine the quantity demanded, the quantity supplied, and the magnitude of the surplus if a price floor of $50 is imposed in this market. c. Determine the quantity demanded, the quantity supplied, and the magnitude of the shortage if a price ceiling of $32 is imposed in this market. Also, determine the full economic price paid by consumers.
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Price Floor: When the market equilibrium price is quite low then in order to support the suppliers the government imposes a price floor under which government passes a low which ensures that the market prevailing price is not lower than the price floor.
Price Ceiling: When the market equilibrium price is quite large then in order to support the buyers the government imposes a price ceiling under which government passes a low which ensures that the market prevailing price is don’t exceed the price ceiling.
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- Ariya likes to play golf. The number of times per year that she plays depends on both the price of playing a round of golf as well as Ariya's income and the cost of other types of entertainment-in particular, how much it costs to go see a movie instead of playing golf. The three demand schedules in the table below show how many rounds of golf per year Ariya will demand at each price under three different scenarios. In scenario D1, Ariya's income is $80,0o00 per year and movies cost $15 each. In scenario D2, Ariya's income is also $80,000 per year, but the price of seeing a movie rises to $17. And in scenario D3, Ariya's income goes up to $100,000 per year, while movies cost $17. Scenario D1 D2 D3 Income per year $80,000 $80.000 $100,000 Price of movie ticket $15 $17 $17 Price of Golf Quantity Demanded $55 15 10 15 $40 25 15 30 $25 40 20 50 Instructions: Round your answers to two decimal places. If you are entering any negative numbers be sure to include a negative sign (-) in front of…An economist estimates that a market has a demand curve of the form P = 37- (1.23) Q and a supply curve of the form P = 1 + (0.984) Q. (See the curves graphed in the figure below.) Accordingly, she estimates that the quantity equilibrium (Qe) in this market will be 16.26 (or 16.260163) and that the equilibrium price (Pe) in the market will be. (Answer may be rounded to nearest hundredth.) Supply X Demand Q OA. $20.84 O B. $12.20 O C. $23.00 O D. $17Consider the demand for pomegranates in two different countries. In Country A, pomegranates are a critical part of the diet and are central to preparation of many recipes. For most of these recipes, there is no feasible substitute for pomegranates. In Country B, households will purchase pomegranates if the price is right, but consumers do not consider them to be particularly special or unique, and few dishes use pomegranates. Suppose pomegranates are native to both countries and due to limited shipping options are not traded. Also suppose that droughts and other weather-related shocks periodically cause unexpected changes in supply conditions. Use the information above sketch a model of how the market for pomegranates in Country A and in Country B would respond to the supply volatility in each country. Then, use your findings to plot the price of pomegranates across time in Country A and Country B. Explain which country will see more volatile prices and why.
- Recently, the spot market price of U.S. hot rolled steel plummeted to $400 per ton. Just one year ago, this same ton of steel cost $700. According to Metals Monitor, the drop in price was due to falling oil prices, along with a rise in cheap imports and excess capacity. These dramatic market changes have greatly impacted the supply of raw steel. Suppose that last year the supply for raw steel was QSraw = 600 + 4P, but this year it has shifted to QSraw= 4,200 + 4P. Assuming the market for raw steel is competitive and that the current worldwide demand for steel isQdraw = 9,000 – 8P, compute the equilibrium price and quantity for the steel market one year ago, and the equilibrium price–quantity combination for the current steel mar ket. Suppose the cost function of a representative steel producer is C(Q) = 1,200 + 15Q2. Compare the change in the quantity of raw steel exchanged at the market level with the change in raw steel produced by a representative firm. How do you explain this…10) Suppose the price of X rises by 20 % on January 10, 2021 and that by March 10, 2021 the quantity of X demanded has fallen by 5 %. What must be true (ceteris paribus) about the quantity of X demanded as of December 10, 2021? a) it must be no greater than it was on March 10 b) it must be at least 20% above what it was on January 10 c) it must be greater than it was on March 10 d) it cannot be determined with the given informationQuestion Earlier this year, 2021, the price of chicken meat rose unexpectedly reached to 250/ kilo at peak from the previous price of 170/ kilo. This 68% increase of price per kilo was primarily caused by excess demand for chicken meat. This is the result of the decrease in consumption for pork meat due to the threat of African Swine Flu (ASF). However, even though consumer shifted preferences, the increase in the price of chicken was perceived to be too high for the budget of consumers. Therefore, sellers realized decrease in their daily aggregate sales from 1,000 kilos to 700 kilos. 1. Illustrate the change in the market equilibrium through a graph. 2. What presumably happened to the total revenues of the sellers during the price hike period? a.) Compute the price elasticity of demand b.) Derive the total revenue before the hike (TR1), and after the hike (TR2).
- 10) Suppose the price of X rises by 20 % on January 10, 2021 and that by March 10, 2021 the quantity of X demanded has fallen by 5 %. What must be true (ceteris paribus) about the quantity of X demanded as of December 10, 2021? a) it must be no greater than it was on March 10b) it must be at least 20% above what it was on January 10c) it must be greater than it was on March 10Between 1950 and 2020, the price of wheat fell dramatically from $20.23 per bushel to $4.85 per bushel. Suppose between 1950 and 2020, the supply of wheat increased substantially due to increases in productivity, shifting the wheat supply curve to the right. With this supply shift, the amount by which the price of wheat falls will be larger the more the demand for wheat. In addition, assume that between 1950 and 2020 the income of the average American increased substantially and that wheat is a normal good. With this increase in income, OA. the price of wheat will be unaffected. OB. the amount by which the price of wheat rises will be smaller the higher the income elasticity of wheat. C. the amount by which the price of wheat falls will be smaller the higher the income elasticity of wheat. OD. the amount by which the price of wheat rises will be smaller the lower the income elasticity of wheat. OE. the amount by which the price of wheat falls will be larger the higher the income…The table below shows two demand schedules for a given style of men’s shoe—that is, how many pairs per month will be demanded at various prices at a men’s clothing store in Seattle called Stromnord. Price D1 Quantity Demanded D2 Quantity Demanded $85 53 13 80 60 15 75 68 18 70 77 22 65 87 27 Suppose that Stromnord has exactly 70 pairs of this style of shoe in inventory at the start of the month of July and will not receive any more pairs of this style until at least August 1. Instructions: Enter your answers as whole numbers.a. If demand is D1, what is the lowest price that Stromnord can charge so that it will not run out of this model of shoe in the month of July? What if demand is D2? b. If the price of shoes is set at $85 for both July and August and demand will be D2 in July and D1 in August, how many pairs of shoes should Stromnord order if it wants to end the month of August with exactly zero pairs of shoes in its inventory? What if the…
- You are the manager of a firm that receives revenues of $40,000 per year from product X and $80,000 per year from product Y. The own price elasticity of demand for product X is -1.5, and the cross-price elasticity of demand between product Y and X is -1.8. How much will your firm's total revenues (revenues from both products) change if you increase the price of good X by 1 percent? Instructions: Enter your response rounded to the nearest dollar. If you are entering a negative number, be sure to use a (-) sign. $The demand side of the market for Sprite is comprised of 2 people. These people are William and Owen. P represents the price of 1 gallon of Sprite, and Qd represents the quantity demanded of Sprite in gallons. William's demand for Sprite is modeled by the equation QdW = 10 - 2P Owen's inverse demand for Sprite is modeled by the equation P = 10 - 2QdO (Part I) With this information, draw the market demand graph. Please label the graph for slope values, intercepts, kinks, etc. (Part II) The market supply is modeled by P = Qs. Let's say that the government places a subsidy of $8 (s = 8). As a result, what is the market equilibrium with this intervention of the government (Q**, PD**, and PS**)? (Part III) Please draw the market demand and market supply on a new graph and indicate/label the market equilibrium with the government intervention through a subsidy. Label the graph for slopes, subsidy, equilibrium points, etc.Earlier this year, 2021, the price of chicken meat rose unexpectedly reached to 250/ kilo at peak from the previous price of 170/ kilo. This 68% increase of price per kilo was primarily caused by excess demand for chicken meat. This is the result of the decrease in consumption for pork meat due to the threat of African Swine Flu (ASF). However, even though consumer shifted preferences, the increase in the price of chicken was perceived to be too high for the budget of consumers. Therefore, sellers realized decrease in their daily aggregate sales from 1,000 kilos to 700 kilos. Illustrate the change in the market equilibrium through a graph. What presumably happened to the total revenues of the sellers during the = price hike period? Compute the price elasticity of demand. Derive the total revenue before the hike (TR1), and after the hike (TR2).