O Macmillan Learning The accompanying diagram represents the market for violins. Suppose that a new technology allows beginner-level violin producers to make violins at a substantially lower (marginal) cost while retaining the same quality. a. Use the graph to illustrate the effect that this will have on the supply and demand of beginner-level violins and then answer the following three questions. b. How much does this new technology increase consumer surplus? Increase in consumer surplus: $ 30 c. How much does this new technology increase producer surplus? Increase in producer surplus: $ 30 300 270 240 210 180 150 120 90 60 30 0 0 10 Market for Violins 20 30 40 50 60 70 Quantity of violins (in thousands) S D 80 90 100

O Macmillan Learning The accompanying diagram represents the market for violins. Suppose that a new technology allows beginner-level violin producers to make violins at a substantially lower (marginal) cost while retaining the same quality. a. Use the graph to illustrate the effect that this will have on the supply and demand of beginner-level violins and then answer the following three questions. b. How much does this new technology increase consumer surplus? Increase in consumer surplus: $ 30 c. How much does this new technology increase producer surplus? Increase in producer surplus: $ 30 300 270 240 210 180 150 120 90 60 30 0 0 10 Market for Violins 20 30 40 50 60 70 Quantity of violins (in thousands) S D 80 90 100

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter4: Supply And Demand: An Initial Look

Section: Chapter Questions

Problem 3TY

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O WORDS POWERED BY TINY QUESTION 2 Suppose that as the price of Y falls from $2.00 to $1.90, the quantity of Y demanded increases from 110 to 118. Then the price elasticity of demand is: For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac). BIUS Paragraph 三 Arial 14px E v A v !!!
en hired as an economic consultant by Google and given the lollwrg derrand wedfor wh st Price of Good X (Millions) Quantity Demanded for XQuantity Demanded ta (Millions) 260 240 5. Y Mllions) 200 220 240 10 15 220 20 200 260 Your advice is needed on the following questions: A) Draw the demand and supply curves for the above market. (4 marks) B) Calculate the price elasticity of demand for software X if the price of soltware X increases tom5 millen to 10 mil p t S whether it is elastic or inelastic.(4 marks) C) Calculate the cross elasticity of demand of software Y when the price of X falls from 20 milion lo 10 Mlion hdie between X and Y. (4 marks) D) Draw diagrams for the demand of X. If other things are not constant what will be the impact on the dend D E) Calculate the equilibrium price and quantity demanded and supply of the above market Label the equilm prt be quantity, and the equilibrium price. (4 marks) O Type here to search
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