In the last six months, the price of fuel for cars has increased very substantially in many countries. Explain why we might expect demand to be more price elastic in the long-run than in the short-run

In the last six months, the price of fuel for cars has increased very substantially in many countries. Explain why we might expect demand to be more price elastic in the long-run than in the short-run

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter5: Price Elasticity Of Demand And Supply

Section: Chapter Questions

Problem 24SQ: Suppose that when price is 10, quantity supplied is 20 units, and when the price is 6, the quantity...

See similar textbooks

Related questions

Q: Suppose the Central Bank sets 1 year real interest rates by following this Taylor rule: rt = +…

A: Taylor's Rule is used by the central banks to draw out a framework for the interest rates in the…

Q: The following table gives output for different numbers of workers for Shiny Sleeves, a producer of…

A: Given wages per hour = 10 $ Marginal product = change in Output / change in workers Total wage cost…

Q: Brief description of a named economic crisis e.g., 2007 to 2010 financial crisis.

A: Financial crisis affects the entire economy. Finance is considered foremost part of economy. Crisis…

Q: Two people are involved in a dispute. Person 1 does not know whether person 2 is strong or weak; she…

A: Bayesian Nash equilibrium refers a strategy profile that maximizes the expected payoff for every…

Q: What is a supply shock and why might it lead to stagflation? Explain & Provide an example using an…

A: A sudden unexpected increase or decrease in the supply of goods, commodity or services is termed as…

Q: Consider the statement: "Interest rates must change when the Fed increases the amount of reserves it…

A: In the mentioned question we have been asked what is true regarding the interest rates if fed deals…

Q: Number of Factories 1 2 3 Q = 100 Q = 200 440 620 800 280 380 480 (Dollars per bike) Q = 300 240 240…

A: In case of short-run average cost functions, the firm incurs two types of costs:-Fixed costs and…

Q: 6 If the marginal propensity to consume (MPC) is 0.40, the expenditure multiplier will be equal to…

A: Marginal propensity to consume refers to the change in consumption due to the change in income.…

Q: Direct tax levied on imported goods refers to international trade barriers in the form of; Cukai…

A: Tariffs might be levied either to raise income or to safeguard domestic industries, however, a…

Q: Would this transfer increase, decrease, or have no effect on income inequality in this group?…

A: Income inequality: It refers to a condition where income is divided unequally between the…

Q: The demand for labor for a firm with market power in the output market equals ______.

A: A monopoly alludes to a firm which has a product with practically no substitute in the market.

Q: Tom's Family Photos is a photographic portrait business in a perfectly competitive market in Fargo.…

A: Perfect competition market is the market where large firms sell the homogenous product to the large…

Q: The following table shows worldwide sales of a certain type of cell phone and their average selling…

A: The demand function shows the connection between the amount demanded of ware by the…

Q: Assuming a firrh has this short-run production data below, do the following: a. fill-in the rest of…

A: We have given the value of the total and marginal products at the various combinations of the fixed…

Q: A man borrowed P 100,000 and promised to pay after 5 months at an interest of 8% compounded monthly…

A: I = P(1+ R12)m - P Where I : the compund interestP : The principle amountR : Compound interest rate…

Q: Which of the following statements would most likely be made by someone following New Classical…

A: The new classical economists do not favor any active intervention in economic activities. They are…

Q: Nigeria has a positive trade balance of $10 billion. If it has a negative balance of services of $8…

A: Balance of trade is otherwise called net export, trade balance, or global trade balance.

Q: Economics As a nation we often talk about our pride in being “a nation of immigrants.” How does…

A: Answer: The sense of pride is applicable to Mexicana as Mexican Americans played role in American…

Q: Let’s assume a monopolist has the following inverse demand curve: p = 248 −3q and the following cost…

A: Introduction Perfect competition is a form of market where large number of firms sells homogeneous…

Q: A job is a contract between a OA. bank; household; capital OB. manufacturer; retailer;…

A: The different factors of production include capital, land, labour, and entrepreneurs. These are…

Q: P(L, K) = 30L0.75 K-0.25 where L is units of labor, K is units of capital, and P(L, K) is total…

A: Equation that communicates the connection between the quantities of productive elements (like work…

Q: f the consumption function is C = C (Y - T) = 0.75 (Y - T) and there is an increase in output of 200…

A: Given Consumption function: C=0.75(Y-T) ..... (1) Increase in output =200 million…

Q: Both Markets are in Equilibrium There is Excess Demand in the Market for Good X = 2.4 There is…

A: In economics, the utility function measures the welfare or satisfaction of a consumer as a function…

Q: Please answer completely and clearly. π

A: According to question , 203 B is to be paid in the above shown annuity form . So , we will consider…

Q: Ms. Spielvogel was paid $400 a week in 1987, the base year. By 1995 she was earning $900 a week. If…

A: The measure that depicts the change in consumer prices that is being based on services and goods…

Q: Which of the following Fed policies (actions) would help reduce inflation? OA) Open market purchases…

A: In the field of economics, inflation refers to an overall rise in the cost of goods and services…

Q: a. When a firm imposes an external social cost (negative externality), the government should impose…

A: When the production or consumption of a product incurs a cost to a third party, it is referred to as…

Q: Consider a 25-year loan with an annual interest rate of 7 percent and monthly payments of $1,201.53.…

A: In the mentioned question we have to calculate the values of loan amount, Lender's IRR and also we…

Q: What is the elasticity of residual supply faced by a country if the market supply elasticity is 3,…

A: This presents another idea, residual cost elasticity — clients' elasticity of demand in light of an…

Q: Currently, your unit labor cost is $9.40 and you have an automation rating of 4. You change the…

A: Given the following information: *Unit labor cost at present =$9.40*Automation rating increases from…

Q: which requires labor hours along with time on two machines. Producing a unit of trash cans requires…

Q: 9 35 30 25 20 15 10 5 O O 2 3 Quantity (Vats of juice) 10 5 6 Marginal Cost Average Variable Cost…

A: The Average Cost is the per unit cost of production acquired by separating the total cost (TC) by…

Q: Q1. Consider the adverse selection model, where the ability of each worker, 0, can be 1, 2 or 5.…

A: Given, Ability of each worker = 1, 2,or 5 Probability associated to each = (1/3,1/6,1/2)…

Q: Suppose that the economy has an inflationary gap. Which of the following policies would most likely…

A: Inflationary gap is a situation where the actual demand is greater than the potential demand.…

Q: True or false? According to the expectations theory of term structure, buyers of bonds prefer…

A: We know that The expectations theory predicts what will be the interest rates in the short-term…

Q: Q=180-2P. he marginal cost of a dinner is constant at $20. uppose the managers do not price…

A: Given data,

Q: The only one interest rate in the economy the Fed can control directly is the FFR. True False

A: Federal Fund Rates (FFR): It is the interests that the commercial banks charges to lend and borrow…

Q: A manufacturing process at Core Manufacturing has a fixed cost of $60,000 per month. A total of 120…

Q: 5

A: Product refers to the output produced by the manufacturers or the producer with an aim or purpose of…

Q: The Economy is at Point B today after being at Point A for the past 5 years. Which of the following…

A: LRAS is the long run aggregate supply curve that shows potential GDP produced in the long run.

Q: Y6

A: We know that The money demand refers to the total amount of all the money demanded in the economy.…

Q: On a distant moon colony, all decisions about government policy are made by a computer. The interest…

A: When a decision has to be made by a computer regarding government policy, then the certain limits…

Q: A Cab Service Company employs 8 drivers. Each driver is able to serve 20 clients per hour worked.…

A: Given Information , For Driver - Each driver can serve 20 clients per hour . Utility of Each driver…

Q: Taco King produces tacos. The market for tacos is perfectly competitive, and the price is $2.00 a…

A: Perfectly competitive market Price per taco = $2 Wage rate per labor per day = $16 Increased Price…

Q: The distinguishing features of oligopoly are *** O A. a small number of interdependent firms with no…

A: Introduction Oligopoly has some special characteristics found which are not present in other market…

Q: Consider the situation from the last question, where the Federal Reserve does money policy to…

A: When Federal Reserve uses monetary policy to stimulate the economy, it uses expansionary monetary…

Q: 23 of 100 An advantage of the Pigouvian tax is that it causes firms to increase supply and reduce…

A: Negative externalities lead to the inefficient outcomes. The pigouvian tax is recommended to correct…

Q: The city government is considering two tax proposals: • A lump-sum tax of $300 on each producer of…

A: In the mentioned question we have been asked what would happen if The city government imposed A…

Q: On September 1, 2014, Watson Company received a loan of $44,940 from One Finance Company. To pay off…

A: This is a case of ordinary annuity where annuities are paid at the end of the year. If P is the…

Q: Suppose the demand function for a product is given by the function: D(g) 0.017q+68 Find the…

A: Disclaimer- “Since you have asked multiple question, we will solve the first question for you as per…

Question

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Introduction

VIEW

Answer

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

Suppose you learned that the price elasticity of demand for wheat is 0.7 between the current price for wheat and a price 2 higher per bushel. Do you think that farmers collectively would try to reduce the supply of wheat and drive the price up 2 higher per bushel? Explain your answer. Assuming that they would try to reduce supply, what problems might they have in actually doing so?
If the midpoint on a straight-line demand curve is at a price of $7, what can we say about the elasticity of demand for a price change from $12 to $10? What about from $6 to $4?
If bus travel is an inferior good, its income elasticity of demand is a. strictly greater than 1. b. positive. c. equal to zero. d. negative.
(Calculating Price Elasticity of Demand) Suppose that 50 units of a good are demanded at a price of Si per unit. A reduction in price to $0.20 results in an increase in quantity demanded to 70 units. Using the midpoint formula, show that these data yield a price elasticity of 0.25. By what percentage would a 10 percent rise in the price reduce the quantity demanded, assuming price elasticity remains constant along the demand curve?
Prove that price elasticity of demand is not the same as the slope of a demand curve.