Suppose that the tofu industry is initially operating in long-run equilibrium at a price level of $5 per block of tofu and quantity of 25 million blocks peryear. Suppose a top medical journal publishes research that animal-alternative protein sources such as tofu could increase your expected lifespan by 4years.The publication is expected to cause consumers to demandtofu at every price. In the short run, firms will respond byShift the demand curve, the supply curve, or both on the following graph to illustrate these short-run effects of the publication.PRICE (Dollars per block)21SupplyDemandDemand0051015 2025 30 35404550QUANTITY (Millions of blocks)In the long run, some firms will respond bySupplyuntilShift the demand curve, the supply curve, or both on the following graph to illustrate both the short-run effects of the publication and the new long-run equilibrium after firms and consumers finish adjusting to the news.PRICE (Dollars per block)2109SupplyDemandDemand05 1015 20 25 30 35 40 4550QUANTITY (Millions of blocks)SupplyThe new equilibrium price and quantity suggest that the shape of the long-run supply curve in this industry isrun.in the long

Competition market can be described as a form of market in which no single producer or consumer has…

PRICE (Dollars per block) PRICE (Dollars per block) 2 Suppose that the tofu industry is initially operating in long-run equilibrium at a price level of $5 per block of tofu and quantity of 25 million blocks per year. Suppose a top medical journal publishes research that animal-alternative protein sources such as tofu could increase your expected lifespan by 4 years. The publication is expected to cause consumers to demand tofu at every price. In the short run, firms will respond by Shift the demand curve, the supply curve, or both on the following graph to illustrate these short-run effects of the publication. Supply Demand Demand 05 10 15 20 25 30 35 40 45 50 QUANTITY (Millions of blocks) In the long run, some firms will respond by Supply until Shift the demand curve, the supply curve, or both on the following graph to illustrate both the short-run effects of the publication and the new long- run equilibrium after firms and consumers finish adjusting to the news. 10 Supply X 05 10 15 20 25 30 35 QUANTITY (Millions of blocks) Demand 40 45 50 Demand Supply The new equilibrium price and quantity suggest that the shape of the long-run supply curve in this industry is in the long

PRICE (Dollars per block) PRICE (Dollars per block) 2 Suppose that the tofu industry is initially operating in long-run equilibrium at a price level of $5 per block of tofu and quantity of 25 million blocks per year. Suppose a top medical journal publishes research that animal-alternative protein sources such as tofu could increase your expected lifespan by 4 years. The publication is expected to cause consumers to demand tofu at every price. In the short run, firms will respond by Shift the demand curve, the supply curve, or both on the following graph to illustrate these short-run effects of the publication. Supply Demand Demand 05 10 15 20 25 30 35 40 45 50 QUANTITY (Millions of blocks) In the long run, some firms will respond by Supply until Shift the demand curve, the supply curve, or both on the following graph to illustrate both the short-run effects of the publication and the new long- run equilibrium after firms and consumers finish adjusting to the news. 10 Supply X 05 10 15 20 25 30 35 QUANTITY (Millions of blocks) Demand 40 45 50 Demand Supply The new equilibrium price and quantity suggest that the shape of the long-run supply curve in this industry is in the long

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter11: Profit Maximization

Section: Chapter Questions

Problem 11.11P

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Femi's HookNLadder is the only company selling fire engines in the fictional country of Alexandrina. Femi Initially produced five trucks, but then decided to increase production to six trucks. The following graph gives the demand curve faced by Femi's HookNLadder. As the graph shows, in order to sell the additional fire truck; Femi must lower the price from $160,000 to $120,000 per truck. Notice that Femi gains revenue from the sale of the additional engine, but at the same time, he loses revenue from the initial five engines because they are all sold at the lower price. Use the purple rectangle (diamond symbols) to shade the area representing the revenue lost from the initial five engines by selling at $120,000 rather than $160,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling an additional engine at $120,000. PRICE (Thousands of dollars per fire engine) 8 8 2 2 2 2 8 2 2 2 20 220 200 180 160 140 120 100 60 40 0 2 3…
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The elasticity of Supply is an important concept in Microeconomics as it relates to a business's ability to adjust its production and its production facility in response to market developments. Think of some examples of products and businesses that would have various degrees of Elasticity of Supply and share them here. For example, what would be the Elasticity of Supply for an original piece of art? What does this imply for the adjustment in this market to a change in Demand? How would you describe the Elasticity of Supply for a product such as peaches, plums, and other tree fruit? Consider first a brief period, such as weeks, and next a much longer period such as five years. How does the time horizon influence market adjustment when there is a change in Demand?
Imagine a new company enters a market selling tutoring. The firm does some experimentation in the market, and it reports the following data points. At $75 per student, 2,250 students sign up for tutoring. At $30 per student, 9,000 students sign up. At $150 per student, no students sign up. 1.Write the equation representing this demand curve. 2. Relax the assumption that demand is linear; instead, assume only that the law of demand holds. Given this assumption and the data you observe, what can we say about the number of students who sign up at prices greater than $75? The school’s accountants determine that when the price per student is $15 it can supply 1,500 spots for tutoring, and that when the price is $45, it can supply 7,500. 3.Relax the assumption that supply is linear; instead, assume only that the law of supply holds. Given this assumption and the data you observe, what can we say about the number of student slots the school supplies at prices greater than $400? 4.Find the…
12 Jim's Camera shop sells two high-end cameras, the Sky Eagle and Horizon. The demands and selling prices for these two cameras are as follows. Ds = demand for the Sky Eagle Ps= selling price of the Sky Eagle DH = demand for the Horizon PH = selling price of the Horizon = 223 - 0.60P + 0.35PH DH=270+ 0.10P - 0.64PH Revenue Ds The store wishes to determine the selling price that maximizes revenue for these two products. Develop the revenue function R (in terms of Ps and PH only) for these two models, and find the revenue maximizing prices (in dollars). (Round your answers to two decimal places.) Price for Sky Eagle Price for Horizon Optimal revenue R = PS = $| PH = $ R = $
Viking Publishing House observed that in the recent years books on nature conservation and climate change have been very popular. As a matter of fact, Jane Goodall's latest book, "The Book of Hope: A Survival Guide for an Endangered Planet" has been a best-seller and Viking estimates the following demand curve for the book: P= 150 -Q In this equation, P is the price of the book and Q denotes yearly sales in thousands of books. In other words, 20,000 books would be expressed as Q = 20. Viking estimates that it incurs a cost of $40 for printing and shipping of each book and pays a $10 royalty to Jane Goodall for each book sold. Calculate the profit-maximizing OUTPUT and PRICE for this book. Also, calculate the TOTAL а. PROFITS. Show all calculations. No calculations, no points. b. Viking's CEO, Mr. Brian Tart, receives a yearly bonus from the company based on the size of the total revenue generated by Jane Goodall's book. Mr. Tart believes that his bonus is going to be satisfactory only…
Assume the Witcher video games only have Nintendo switch versions. CD Projekt Red announces the highly anticipated Witcher 4 game will be released next month. No new Nintendo switches are available for the next 6 months due to covid related supply issues. What will the impact of this announcement be on the market for USED Nintendo switches? Explain by Microeconomics only. (i.e. quantity demand, supply; demand curve)
What can you conclude about the price elasticity of demand in each of the following statements? “The pizza delivery business in this town is very competitive. I’d lose half my customers if I raised the price by as little as 10%.” “I owned both of the two Jerry Garcia autographed lithographs in existence. I sold one on eBay for a high price. But when I sold the second one, the price dropped by 80%.” “My economics professor has chosen to use the Krugman/Wells textbook for this class. I have no choice but to buy this book.” d. “I always spend a total of exactly $10 per week on coffee.”
Viking Publishing House observed that in the recent years books on nature conservation and climate change have been very popular. As a matter of fact, Jane Goodall's latest book, "The Book of Hope: A Survival Guide for an Endangered Planet" has been a best-seller and Viking estimates the following demand curve for the book: P = 150 - Q In this equation, P is the price of the book and Q denotes yearly sales in thousands 20,000 books would be expressed as Q = 20 books. In other words, Viking estimates that it incurs a cost of $40 for printing and shipping of each book and pays a $10 royalty to Jane Goodall for each book sold. a. Calculate the profit maximizing OUTPUT and PRICE for this book. Also, calculate the TOTAL PROFITS.
Mo's HookNLadder is the only company selling fire engines in the fictional country of Alexandrina. Mo initially produced eight trucks, but then decided to increase production to nine trucks. The following graph gives the demand curve faced by Mo's HookNLadder. As the graph shows, in order to sell the additional fire truck, Mo must lower the price from $80,000 to $60,000 per truck. Notice that Mo gains revenue from the sale of the additional engine, but at the same time, he loses revenue from the initial eight engines because they are all sold at the lower price. Use the purple rectangle (diamond symbols) to shade the area representing the revenue lost from the initial eight engines by selling at $60,000 rather than $80,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling an additional engine at $60,000. PRICE (Thousands of daars perfe Mo 2*** 110 150 1 QUANTITY (Fe engines . Demand . Revenue Lost Revenue Ganed Increase…