a) i)Explain difference between; ii,Microeconomics and macroeconomics iiiPositive and Normative economics b) Given the following demand and supply functions as; i)Find the price elasticity of demand and price elasticity of supply at the equilibrium point. ii)Based on the values obtained from Price elasticity of supply in (i) above, what advice would you give to the producer if he is to increase revenue? iv)Using illustrations, distinguish between Minimum and maximum price v)Assuming the government, set the price at 45shs, determine whether its minimum or maximum price, and state the surplus or deficit
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a) i)Explain difference between;
ii,
iiiPositive and Normative economics
b) Given the following
i)Find the
ii)Based on the values obtained from Price elasticity of supply in (i) above, what advice would you give to the producer if he is to increase revenue?
iv)Using illustrations, distinguish between Minimum and maximum price
v)Assuming the government, set the price at 45shs, determine whether its minimum or maximum price, and state the surplus or deficit
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- Demand, Supply, and Market Equilibrium - Think of a product that you have purchased recently (e.g. soda, diapers, takeout meals, milk, shoes, manicure/pedicure, video game, etc...). Explain how the law of demand affected your purchase. Give specific examples of how the determinants of demand and supply affect this product (T-I-P-E-N and P-R-E-S-T). What happens to the demand curve and the supply curve when any of these determinants change? What would cause a change in demand versus a movement along the same demand curve for this product? How would you determine the new equilibrium price and quantity that result from these changes? Can you demonstrate some of these changes graphically? Price Elasticity of Demand - Consider a product that you have purchased recently. If the price of this item increases, how would you adjust your purchases? Is the Demand for this product Price Elastic or Price Inelastic? Justify your classification by applying the determinants of elasticity to…This problem involves solving demand and supply equations together to determine price and quantity. a. Consider a demand curve of the form QD=-2P+20, where QD is the quantity demanded of a good and P is the price of the good. Graph this demand curve. Also draw a graph of the supply curve Qs =2P-4, where Qs is the quantity supplied. Be sure to put P on the vertical axis and Q on the horizontal axis. Assume that all the Qs and Ps are nonnegative for parts a, b, and c. At what values of P and Q do these curves intersect-that is, where does QD = Qs ? b. Now, suppose at each price that individuals demand four more units of output-that the demand curve shifts to QD - 2P+24. Graph this new demand curve. At what values of P and Q does the new demand curve intersect the old supply curve-that is, where does QD = Qs ? c. Now finally, suppose the supply curve shifts to Q's=2P-8. Graph this new supply curve. At what values of P and Q does QD=Q's? Show all working calculations and label garph with…3)What is the relationship between a demand schedule and a demand curve? * a)A demand schedule shows the various quantities of the good demanded, while a demand curve shows the various prices. b)A demand schedule is a numerical tabulation of the quantity demanded of a good at different prices, while a demand curve is a graphical representation of the law of demand. c)A demand curve shows the various quantities of the good demanded, while a demand schedule shows the various prices. d)A demand curve is a numerical tabulation of the quantity demanded of a good at different prices, while a demand schedule is a graphical representation of the law of demand.
- Consider each of the scenarios before, and explain what the effect of the given changes would be on the market for the good in bold that was originally in equilibrium. State which curve(s) shift (supply, demand, both, neither), and whether price and quantity are higher or lower after the change, or if this is not possible to determine. (a) An increase in the cost of dorm rooms on the market for apartments in the U-district? (b) The government increases the consumption tax rate for consumersp by 5% on the market for Rolex watches? (c) The increase in price of milk on cakes? Note: The solution should not be hand written.es The graph below shows the market for oats. Price per bushel 12 11 10 9 8 10 432 S 4 0 10 50 70 100¹10120 30 90 80 60 40 20 Quantity per period (in millions of bushels) S Tools Sz Prev 4 of 8 # Next >Help please
- Answer impact on quantityHi! This is for our Microeconomics course. We are tasked to solve the following items. Please help me.Ethanol, a fuel, is made from corn. Ethanol production increased 5.5 times from 2000 to 2008 and another 34% from 2008 to February 2013 (www.ethanolrfa.org). What effect did this increased use of corn for producing ethanol have on the price of corn and the consumption of corn as food? 1.) Use the line drawing tool to draw either a new demand curve (D2) or a new supply curve (S,) that shows how the increased use of corn for producing ethanol affects the market for corn as food, Properly label this line. 2.) Use the point drawing tool to indicate the new market equilibrium. Label this point 'e2'. Carefully follow the instructions above, and only draw the required objects. What happens to the equilibrium price and equilibrium quantity of corn as food? In the market for corn as food, the equilibrium price V and the D1 Q1 equilibrium quantity Q, quantity of corn as food ... $. price of corn
- 1. In the following, we are going to use the microeconomic theory we have developed in class to better understand the potential impact of a rise in the price of gasoline due to a tax increase. We can use the following "constant elasticity" demand function, Qg = BP*Y³ ,as a reasonable structure to assume for the demand for gasoline. The reason it is named as such is that the exponents for the price (P) and income (Y), represent the price elasticity of demand (ɛ) and price elasticity of supply (5) for all levels of each variable. Use the formula for price elasticity of demand to confirm that the parameter ɛ, in fact, represents this demand equation's price elasticity. Note that you would receive an analogous result if you did this for income elasticity of demand. b. Use the following estimated values to "calibrate" the demand function given above, that is find a plausible value for the parameter ß based on average annual consumption, average price per gallon, and average income. Once you…Draw a demand curve and a supply curve for one of your favourite goods and explain why the point of intersection for demand and supply gives the equilibrium.also illustrate diagrammatically what happens to the equilibrium price and quantity in this market as a result of a decrease in all consumers’ income. Here you have to consider: Whether a change in all consumers’ income has an effect on the demand or the supply side of the market. How to establish the direction of the change (increase or decrease?) How to deduce the impact on the equilibrium. Go back to the original equilibrium; to the point before the consumer income decrease. Now, consider that the market is flooded by new firms wanting to produce the good. Draw this change—again, consider the three points mentioned above. Finally, let’s put the two things together. What happens if you simultaneously decrease income and increase the number of firms involved in the market in terms of the new equilibrium price and quantity? Hint:…PLEASE ANSWER c The Market for Chicken Meat in Davao Citya. Fill in the missing algebraic signs ( + or -) of the demand and supply equations for chicken meat belowaccording to the hypothesized direction of relationships. where:Q = quantity of chicken meat in kilograms, per dayPC = price of chicken meat (in pesos per kilogram)I = income of average consumer (in pesos per day)PB=price of beef (in pesos per kilogram)W=wage rate paid in the poultry business (in pesos per day)PF= price of mixed feeds (in pesos per kilogram) Demand: QD = 20 ___ 1.5PC____0.8 I ____ 0.6 PBSupply: QS = - 20 ___ 4.5PC____0.5 W ____ 3 PFb. Suppose the other variable affecting the demand for and supply of chicken meat have the followingvalues: I = P300/day ; PB = P100/kg; W = P100/day; PF = P10/kgi. Derive the simple demand and supply equations where Q is a function of P.ii. Solve for the equilibrium price and quantity in the market.iii. Suppose the government imposes a price ceiling of P50/kg:1. What happens…