Microeconomics
13th Edition
ISBN: 9781337617406
Author: Roger A. Arnold
Publisher: Cengage Learning
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Question
Chapter 4, Problem 10QP
(a)
To determine
The relative price.
(b)
To determine
The relative price.
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Assume that the markets for sugar cane, rum and whiskey are initially in equilibrium (i.e., supply equals demand in each case). Assume further that a good harvest impacts the world’s sugar cane crop. Sugar cane is a principal ingredient in rum, but it is not an ingredient in whiskey. Rum and whiskey are substitutes in consumption.
Discuss the impact of the good harvest on each of the three markets.
Discuss the effect on the markets for each of the three products if the government implements a price restriction in the sugar cane market with the aim of protecting the farmers. How will this impact the revenues for sugar growers, rum producers and whiskey producers?
If the absolute price of good X is $10 and the absolute priceof good Y is $14, then what is (a) the relative price of goodX in terms of good Y and (b) the relative price of good Y interms of good X?
Assume the following events are taking place simultaneously: the prices of gasoline rises, commuting by train becomes more
affordable and more comfortable, the price of steel falls, automobile insurance premium increases, and auto-workers' wages
decreases. What would happened to the equilibrium price of new cars if new cars are normal goods?
Price will fall.
a.
b.
C.
d.
A
B
D
Price will stay exactly the same.
Price will rise.
The price change will be ambiguous.
a
b
с
d
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