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Q#1Assume the demand curve for beer is given by P=11.7-2Q; the supply curve is given by P=Q. (a) Find the equilibrium quantity and the corresponding market clearing price. (b) Now assume the supply of beer will be subsidized with $0.30 per beer. What is the quantity consumed/supplied? What are the prices? Calculate the total subsidy paid. How much will be gained by the suppliers of beer? What is the overall change in welfare? Is this a gain or a loss? Q#2: Karl and John exhibit different consumption pattern when they fill their cars at the (gasoline) filling station. Karl always buys 5 gallons, regardless of the price of gasoline. John always spends $20 on gasoline, regardless of its price. Calculate the price elasticity of Karl and John and show your work! Q#3: About 100 million pounds of dates are consumed in the United States each year, and the price has been about 50 cents per pound. However, date producers feel that their incomes are too low and have convinced the government that price supports are in order. The government will therefore buy up as many dates as necessary to keep the price at $1 per pound. However, government economists are worried about the impact of this program because they have no estimates of the elasticities of date demand or supply.a. Could this program cost the government more than $50 million per year? Under what conditions? Could it cost less than $50 million per year? Under what conditions? Illustrate with a diagram. b. Could this program cost consumers (in terms of lost consumer surplus) more than $50 million per year? Under what conditions? Could it cost consumers less than $50 million per year? Under what conditions? Again, use a diagram to illustrate.
an estimate of the demand function for household furniture produced the following resultsf 0.0036y 1.08r0.16 p 0.48
Think that the following entry game. Here, company B is an existing company in the market, and company A is a potential entrant. Company A must decide whether to enter the market or stay out of the market.
Define cross-price elasticity, including substitutes and complements and provide a credible explanation of whether demand would tend to be more or less elastic for the share of consumer income devoted to a good.
1.explain why the short-run aggregate supply curve is not vertical but the long-run aggregate supply curve is
Find Livia's best affordable bundle of tea and coffee. How does the equilibrium condition differ from the condition we derived in lecture for the "typical" case? How much could the price of a cup of coffee risewithout harming her standard of livin..
today is april 1 and you have received the following budget printout. your charge nurses are requesting an additional
Assume that keynesian model applies to the economy in the short-run. After the stock market fell sharply in 2008, the aggregate denabd decreased greatly around the world. in order to prevent the short-run economic recession, which monetary policy ..
Imagine a local government is considering opening a public swimming pool in a residential neighborhood
in a perfectly competitive industry every firm has identical cost structure. the short-run total cost curve of an
Suppose a perfectly competitive firm is producing 300 units of output, P = $10, ATC of 300th unit is $8, marginal cost of 300th unit = $10, and AVC of the 300th unit = $6. Based upon this information, the firm is:
there are 20000 people in a population. the government is considering a project which will cost 1000000 annually to add
Discuss the advantages and disadvantages regarding salary, office setup costs, work schedules, patient payment options, and malpractice insurance,.Conclude your analysis by choosing one of the options and explaining why you've done so.
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