Calculate the price elasticity of karl and john

Assignment Help Microeconomics
Reference no: EM13498526

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.

Reference no: EM13498526

Questions Cloud

State the structure of the stereoisomer with dipole moment : One has a dipole of 0 D, and the other has a dipole moment of 2.95 D. Draw the structure of the stereoisomer with dipole moment of 2.95 D.
Explain the nature of intermolecular interactions in mixture : Is it possible to have homogeneous binary liquid solution whose viscosity is higher or lower than that of either of the two component liquid? what conclusions would you draw about the nature of intermolecular interactions in such a mixture
What is the original compression distance of the spring : a 3.8 kg block is accelerated from rest by a compressed spring of spring constant 650 N/m. What is the original compression distance of the spring
Write an e-mail that will impress your supervisor : Write an e-mail that will impress your supervisor. Make sure the subject line is concise and descriptive or what the memo is about.
Calculate the price elasticity of karl and john : Q#1Assume the demand curve for beer is given by P=11.7-2Q; the supply curve is given by P=Q.
Determine width of the north wall can she see : In a church choir loft, two parallel walls are 5.70 m apart. The singers stand against the north wall. What width of the north wall can she see
Explain why the organic layer is washed with 2 m naoh : In the purification process, the organic layer is washed with 2 M NaOH and then with water. What is the purpose of these washes
Explain how many cells are on the plate : How many cells are on the plate. What fraction of the cell surface is occupied by receptors versus normal phospholipids
Characteristics of mendels garden pea plant pisumsativum : Characteristics of Mendels garden pea plant Pisumsativum that make it an ideal organism for genetic experiments and why the two characteristics are useful.

Reviews

Write a Review

 

Microeconomics Questions & Answers

  The estimate of demand function for household furniture

an estimate of the demand function for household furniture produced the following resultsf 0.0036y 1.08r0.16 p 0.48

  Determining nash equilibrium strategies

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

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.

  1explain why the short-run aggregate supply curve is not

1.explain why the short-run aggregate supply curve is not vertical but the long-run aggregate supply curve is

  How does the equilibrium condition differ from the condition

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..

  Explain how will you deal with requests based on the budget

today is april 1 and you have received the following budget printout. your charge nurses are requesting an additional

  How to prevent the short-run economic recession

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 ..

  Opening a public swimming pool in a residential neighborhood

Imagine a local government is considering opening a public swimming pool in a residential neighborhood

  Write the equation of the individual firms short-run supply

in a perfectly competitive industry every firm has identical cost structure. the short-run total cost curve of an

  Computing economic profit or loss

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:

  How many lives does the project save annually find the

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

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.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd