EBK MICROECONOMICS
5th Edition
ISBN: 9781118883228
Author: David
Publisher: YUZU
expand_more
expand_more
format_list_bulleted
Question
Chapter 2, Problem 2.24P
To determine
To discuss the elasticity of supply in short run and long run
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Between 1950 and 2020, the price of wheat fell dramatically from $20.23 per bushel to $4.85 per bushel.
Suppose between 1950 and 2020, the supply of wheat increased substantially due to increases in productivity, shifting the wheat supply curve to the right.
With this supply shift, the amount by which the price of wheat falls will be larger the more
the demand for wheat.
In addition, assume that between 1950 and 2020 the income of the average American increased substantially and that wheat is a normal good.
With this increase in income,
OA. the price of wheat will be unaffected.
OB. the amount by which the price of wheat rises will be smaller the higher the income elasticity of wheat.
C. the amount by which the price of wheat falls will be smaller the higher the income elasticity of wheat.
OD. the amount by which the price of wheat rises will be smaller the lower the income elasticity of wheat.
OE. the amount by which the price of wheat falls will be larger the higher the income…
Q#3. The following demand for potatoes in the United States
was estimated for the year 1959-1973 period.
Q = 163.6 – 17.7P, + 9.3 I
Where, Q is the annual consumption of potatoes in pounds per
person; Px is the average price in dollars per hundred pounds of
potatoes; and I is the average income in thousands of 1958
dollars.
If we imagine that this year, Px=$7 and I=$2.344, then calculate
a. The sales of potatoes this year
b. Compute the elasticity of sales with respect to Px. Is price
elasticity of demand for potatoes elastic or inelastic?
c. What would the sales be next year if Px was reduced by
10% and I was increased by 20%?
Question
Earlier this year, 2021, the price of chicken meat rose unexpectedly reached to 250/ kilo at peak from the previous price of 170/ kilo. This 68% increase of price per kilo was primarily caused by excess demand for chicken meat. This is the result of the decrease in consumption for pork meat due to the threat of African Swine Flu (ASF). However, even though consumer shifted preferences, the increase in the price of chicken was perceived to be too high for the budget of consumers. Therefore, sellers realized decrease in their daily aggregate sales from 1,000 kilos to 700 kilos.
1. Illustrate the change in the market equilibrium through a graph.
2. What presumably happened to the total revenues of the sellers during the price hike period?
a.) Compute the price elasticity of demand b.) Derive the total revenue before the hike (TR1), and after the hike (TR2).
Chapter 2 Solutions
EBK MICROECONOMICS
Ch. 2 - Prob. 1RECh. 2 - Prob. 2RECh. 2 - Prob. 3RECh. 2 - Prob. 4RECh. 2 - Prob. 5RECh. 2 - Prob. 6RECh. 2 - Prob. 7RECh. 2 - Prob. 8RECh. 2 - Prob. 9RECh. 2 - Prob. 10RE
Ch. 2 - Prob. 2.1PCh. 2 - Prob. 2.2PCh. 2 - Prob. 2.3PCh. 2 - Prob. 2.4PCh. 2 - Prob. 2.5PCh. 2 - Prob. 2.6PCh. 2 - Prob. 2.7PCh. 2 - Prob. 2.8PCh. 2 - Prob. 2.9PCh. 2 - Prob. 2.10PCh. 2 - Prob. 2.11PCh. 2 - Prob. 2.12PCh. 2 - Prob. 2.13PCh. 2 - Prob. 2.14PCh. 2 - Prob. 2.15PCh. 2 - Prob. 2.16PCh. 2 - Prob. 2.17PCh. 2 - Prob. 2.18PCh. 2 - Prob. 2.19PCh. 2 - Prob. 2.20PCh. 2 - Prob. 2.21PCh. 2 - Prob. 2.22PCh. 2 - Prob. 2.23PCh. 2 - Prob. 2.24PCh. 2 - Prob. 2.25PCh. 2 - Prob. 2.26PCh. 2 - Prob. 2.27PCh. 2 - Prob. 2.28PCh. 2 - Prob. 2.29PCh. 2 - Prob. 2.30P
Knowledge Booster
Similar questions
- The market for organic and locally sourced foods has skyrocketed over the past decade as consumers focus on improving their eating habits. However, severe droughts have caused organic food prices to rise significantly, forcing many consumers to shop at conventional supermarkets (which are increasingly adding organic food options) instead of organic food markets such as Whole Foods. In response, companies such as Whole Foods have begun offering more nonorganic options on their store shelves in order to provide their consumers with more affordable options. Based on this response, what did companies such as Whole Foods realize about the elasticity of demand for organic foods that caused them to lower their prices by changing the type of foods they sell?arrow_forwardSales of bananas have dropped from 100,000 pounds to 75,000 pounds per day because a freeze resulted in a smaller supply. In the process, the average price of a pound of bananas has risen from $0.80 to $1.00. Which of the following is most likely true? The demand for bananas has increased because of the increase in price.The demand for ice cream (used in banana splits) is likely to decrease.The price of tapes will rise about 25 percent.The total revenue (P times Q) from sales has risen.The quantity demanded of ice cream will increase. Flag this Questionarrow_forwardChina’s Thirst for Gas Hurricanes in the Gulf of Mexico, deteriorating pipelines in Alaska, and conflict in Iraq can cause gasoline prices to rise by restricting supply. Often the events we see in the headlines affect the supply of oil available to consumers, but changes in the level of world demand for petroleum products also affects the price of oil. China’s Growing Demand U.S. demand for petroleum products has been high for decades. The United States is the largest consumer of oil, using about a quarter of the world’s petroleum. This is quickly changing. Emerging nations are becoming thirsty for oil, and China is at the top of that list. How did such a rapid change happen? In the past, China has not needed much petroleum. As the country is industrializing, however, it needs more and more fuel to satisfy its growing energy needs. In fact, as the graph of oil consumption between 1995 and 2025 shows, China’s consumption is increasing much more rapidly than…arrow_forward
- Change in Demand Determinants: The PRC's increased demand for US crop products, such as corn and soybeans, directly impacted the fertilizer market. This change in the demand for final crop products (a non-price determinant of fertilizer demand) caused a shift in the fertilizer demand curve to the right. As a result, the demand for fertilizer increased. This can be represented on a graph by shifting the demand curve to the right. Could you bring me the graph?arrow_forwardYou run a small business and would like to predict what will happen to the quantity demanded for your product if you raise your price. While you do not know the exact demand curve for your product, you do know that in the first year you charged $51 and sold 1,304 units and that in the second year you charged $37 and sold 1,780 units. If you plan to lower your price by 10 percent, what would be a reasonable estimate of what will happen to quantity demanded in percentage terms? Incorporate the point elasticity of demand using the initial price and quantity in your answer. The quantity demanded will increase by percent. (Enter your response rounded to two decimal places.)arrow_forwardChange in Demand Determinants: The PRC's increased demand for US crop products, such as corn and soybeans, directly impacted the fertilizer market. This change in the demand for final crop products (a non-price determinant of fertilizer demand) caused a shift in the fertilizer demand curve to the right. As a result, the demand for fertilizer increased. This can be represented on a graph by shifting the demand curve to the right. Analysis: The shift in the demand curve to the right led to an increase in both the equilibrium price and quantity of fertilizer. Farmers, responding to the higher demand for their crops, needed more fertilizer to enhance crop yields. As a result, fertilizer suppliers saw an increase in demand for their products. Could you bring me the graph? Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.arrow_forward
- You are an Economics consultant at Economics 4U, a small consulting firm that helps its clients to use Economics knowledge for better business decision-making. You have been approached by a new client, Mr. PD Smith, a product manufacturer, to conduct research on the price elasticity of demand, income elasticity of demand and the price elasticity of supply for his product category. The manufacturer would like to obtain a better understanding of the concept of elasticity and how to use this knowledge to make better strategic decisions about his product.Present your findings in a report that provides the following information: • Introduction Explain the purpose of your report and identify the product you have chosen (Provide a brief explanation of the product category if it is one that is not well known).(+- ¼ page)arrow_forwardYou are an Economics consultant at Economics 4U, a small consulting firm that helps its clients to use Economics knowledge for better business decision-making. You have been approached by a new client, Mr. PD Smith, a product manufacturer, to conduct research on the price elasticity of demand, income elasticity of demand and the price elasticity of supply for his product category. The manufacturer would like to obtain a better understanding of the concept of elasticity and how to use this knowledge to make better strategic decisions about his product. Present your findings in a report that provides the following information. Price elasticity of supply the price elasticity of supply coefficient (based on your own research). Point out the factors that have determined this particular elasticity coefficient. Use a graph to illustrate the relevant category of elasticity of supplyarrow_forwardYou are an Economics consultant at Economics 4U, a small consulting firm that helps its clients to use Economics knowledge for better business decision-making. You have been approached by a new client, Mr. PD Smith, a product manufacturer, to conduct research on the price elasticity of demand, income elasticity of demand and the price elasticity of supply for his product category. The manufacturer would like to obtain a better understanding of the concept of elasticity and how to use this knowledge to make better strategic decisions about his product. Present your findings in a report that provides the following information: Price elasticity of demand Identify the price elasticity of demand coefficient for the product (based on your own research) and what it reveals about the product. Also identify and discuss the factors that have determined that particular elasticity coefficient. Use a graph to illustrate the relevant category of price elasticity of demand.(+- 2 pages)arrow_forward
- You are an Economics consultant at Economics 4U, a small consulting firm that helps its clients to use Economics knowledge for better business decision-making. You have been approached by a new client, Mr. PD Smith, a product manufacturer, to conduct research on the price elasticity of demand, income elasticity of demand and the price elasticity of supply for his product category. The manufacturer would like to obtain a better understanding of the concept of elasticity and how to use this knowledge to make better strategic decisions about his product. Income elasticity of demand Identify the income elasticity of demand for the product (based on your own research) and explain what the elasticity coefficient reveals about the product.Present your findings in a report that provides the following information:arrow_forwardYou are an Economics consultant at Economics 4U, a small consulting firm that helps its clients to use Economics knowledge for better business decision-making. You have been approached by a new client, Mr. PD Smith, a product manufacturer, to conduct research on the price elasticity of demand, income elasticity of demand and the price elasticity of supply for his product category. The manufacturer would like to obtain a better understanding of the concept of elasticity and how to use this knowledge to make better strategic decisions about his product. Present your findings in a report that provides the following information: • Introduction Explain the purpose of your report and identify the product you have chosen (Provide a brief explanation of the product category if it is one that is not well known). (+- ¼ page) • The Concept of Elasticity Explain the general concept of elasticity and how it can be applied to improve the decisions made about a product.Price elasticity of demand…arrow_forwardLast year, 1000 gallons of almond milk (a non-dairy product) were sold at a price of $10. Yet, this year, a bad harvest in California has wiped out a significant part of the almond harvest. At the same time, a larger number of people are looking to shift away from dairy products towards non- dairy alternatives. Because of these two changes, the equilibrium price will increase and change in the equilibrium quantity is unambiguous. the equilibrium price will decrease but change in the equilibrium quantity is ambiguous. the change in the equilibrium price is ambiguous, but the equilibrium quantity will increase. O the equilibrium price will increase but change in the equilibrium quantity is ambiguous.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSON
Engineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education