Suppose there are three types of Apples A, B, and C being sold and consumed. The demand and supply equations for each type are: DA = 20-2PA+4PB+PC SA = 4PA-5 DB = 10+3PA-5PB+2PC SB = 3PB-7 DC = 70+4PA+2PB-5PC SC = 5PC-16 Determine equilibrium prices and quantities using Cramer's rule. Calculate the elasticity of demand for B with respect to prices of variety A, B, and C and interpret the economic meaning of the results

Suppose there are three types of Apples A, B, and C being sold and consumed. The demand and supply equations for each type are: DA = 20-2PA+4PB+PC SA = 4PA-5 DB = 10+3PA-5PB+2PC SB = 3PB-7 DC = 70+4PA+2PB-5PC SC = 5PC-16 Determine equilibrium prices and quantities using Cramer's rule. Calculate the elasticity of demand for B with respect to prices of variety A, B, and C and interpret the economic meaning of the results

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter5: Markets In Motion And Price Controls

Section: Chapter Questions

Problem 10P

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Suppose there are three apples A,B and C being sold and consumed. The demand and supply equations for each type are: DA=20-2PA+4PB+PC , SA=4PA-5 DB=10+3PA-5PB+2PC , SB= 3PB-7 DC=70+4PA+2PB-5PC , SC=5PC-16 a) determine equilibrium Prices and quantities using Cramer's rule. b) calculate the elasticity of demand for B with respect to Prices of variety A,B and C and interpret the economic meaning of the results
Suppose there are three types of Apples A, B and C being sold and consumed. The demand and supply equations for each type are: DA = − PA + PB + PC 20 2 4 S A = 4PA − 5DB PA PB PC = 10 + 3 − 5 + 2 SB = 3PB − 7DC PA PB PC = 70 + 4 + 2 − 5 = 5 − 16 SC PC• Determine equilibrium prices and quantities using Cramer’s rule. • Calculate the elasticity of demand for B with respect to prices of variety A, B and C and interpret the economic meaning of the results.
“The laws of supply and demand indicate that higher prices are ineffective in reducing smoking. In particular, higher cigarette prices will reduce the demand for cigarettes. This reduction in demand will push the equilibrium price back down to its original level. Since the equilibrium price will remain unchanged, smokers will consume the same number of cigarettes.” Do you agree or disagree with this view?
Q.3 being sold and consumed. The demand and supply equations for each type are: Suppose there are three types of Apples A, B and C D = 20 – 2P, +4P, + Pc D = 10+ 3P, – 5P, + 2P. S = 3P, - 7 De = 70+ 4P, + 2P, – 5P. Se = 5P. – 16 • Determine equilibrium prices and quantities using S, = 4P,-5 %3D Cramer's rule. • Calculate the elasticity of demand for B with respect to prices of variety A, B and C and interpret the economic meaning of the results.
2) Consider the following demand Qd = 140 - 3P and supply QS = 20 +20P for lunch at the Mountain View Golf and Country Club. a) Draw the demand and supply curves, and calculate the equilibrium price and quantity. b) The provincial government has imposed a sales tax of 12 percent on restaurant meals. Show how the above market is affected, and the new equilibrium price and quantity. (calculation is necessary). c) Explain and illustrate how the consumer's welfare is affected. Specifically show how the (1) consumer surplus, (2) total value, and (3) marginal value change.
X is an inferior good. If there is an increase in incomes, then (quantity supplied,quantity demanded, supply, demand) for good X will (increase, decrease). This will cause the equilibrium price to (increase, decrease) and quantity to (increase, decrease). If a new type of fertilizer is invented that makes coconut trees twice as productive, the (quantity supplied, quantity demanded, supply, demand) for coconuts will (increase, decrease). This will cause the price to (increase, decrease) and quantity to (increase, decrease).
Suppose Harry and Hermione are shipwrecked on the deserted tropical island of Zabini. The quantity of coconuts and magical spells on the island are in fixed supply. The Edgeworth box below shows all the possible allocations of these two goods and can be used to answer the questions below. For each statement below, note whether the statement is true or false and provide a brief justification. (1) If Hermione is more skilled at spells than Harry, then Harry prefers A to B. True or False? Coconuts Hermione B Magical spells Harry
The demand and supply functions for three (03) goods are given as follows: Dx = 100-3Px+Py+3Pz Dy = 80+Px-2Py-Pz Dz = 120+3Px-Py-4Pz Sx = -10+Px Sy = -20+3Py Sz = -30+2Pz The equilibrium prices and quantities of all three goods are? The government decides to: a) Impose a 25% Tax on X? b) Impose a 5 Rs /unit Tax on Y? c) Give a 10% subsidy on good z? Analyze the impact of each of these policies separately on equilibrium prices and quantities? Analyze the impact of each of these policies separately on equilibrium prices and quantities?
The demand and supply functions for three (03) goods are given as follows: Dx = 100-3Px+Py+3Pz Dy = 80+Px-2Py-Pz Dz = 120+3Px-Py-4Pz Sx = -10+Px Sy = -20+3Py Sz = -30+2Pz The equilibrium prices and quantities of all three goods are? The government decides to: a) Impose a 25% Tax on X? b) Impose a 5 Rs /unit Tax on Y? c) Give a 10% subsidy on good z? Analyze the impact of each of these policies separately on equilibrium prices and quantities? Analyze the impact of each of these policies separately on equilibrium prices and quantities? Provide theoretical justification (using diagrams) of all results obtained?
Which of the following would result in equilibrium shifting from point C to point A? A. There was an increase in income and technology advanced. B. There was a decrease in income and technology advanced. C. There was an increase in the price of a complement and an increase in wages paid by the firms. D. There was a decrease in the price of a complement and an increase in wages paid by the firms. E. There was an increase in the number of buyers but the number of firms remained unchang
Use the following information. The graph below represents the market for coffee. Suppose S1 and D1 are the relevant supply and demand curves and that the market is in equilibrium at C. S00 /s1 450- 400-> 350- $2 300- 250 200- 150- 100- 50 D2 D1 25 30 75 100 125 150 175 200 Quan Refer to the graph above. A shift in equilibrium from C to A could be the result of 1. Availability of improved technology to pick coffee beans II. Destroyed coffee beans due to insect infestation III. An increase in the price of coffee IV. A decrease in the number of coffee consumers V. The publication of a report that publicizes the benefits of drinking coffee O land IV only OIl and IV only O I and V only OIl and III only
Consider the market for the normal good Corn Flakes. Assume the supply and demand curves have normal (i.e. consistent with the laws of supply and demand) slopes. The market is currently in equilibrium. In each of the following situations indicate what will happen to the price of Corn Flakes and the quantity sold in the market. Each situation described below is a separate situation and should be treated independently. (I.e., Will the price of Corn Flakes increase, decrease, or not change? Will the quantity of Corn Flakes sold in the market increase, decrease, or not change? Diagrams are not necessary in your answer. I am only asking for the final results. That is what happens to price and quantity sold after each of the following events as described occurs.) a. The price of Rice Krispies and Fruit Loops both decrease. Corn Flakes price will ________ and quantity sold will _____________ b. Consumer disposable income increases significantly as a result of an income tax…