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1. (a) Bagels and cream cheese are often eaten together, so they are complements. Suppose that the equilibrium price of cream cheese has risen but the equilibrium quantity of bagels has fallen. What could be responsible for this pattern - a rise in the price of flour or a rise in the price of milk? Illustrate and explain your answer with demand and supply diagram for bagel
(b) Suppose the government imposes a price floor on the bagel market to maintain bagel producers' income. Briefly explain to government why the policy would yield an inefficient outcome. Use the supply and demand model to illustrate your answer.
2. Boom--Energy is a manufacturer of energy--boosting products. The Board of Boom--Energy has hired you to investigate whether its Horse--Energy Bars and Choco Bars are complementary goods, substitute goods or there is no interdependence between the two goods. Using appropriate economic tools and terminology, explain how you would carry out your investigation.
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“This is a work of microeconomics, in which two scenarios have been chosen for analysis. With the help of the Cross-price Elasticity of Demand, equilibrium price and equilibrium demand of the complementary and substitute goods can be regulated. Governing body has taken Price Floor Model to reduce the excessive goods. Cross Price Elasticity of Demand has been chosen for understanding two situations.”
What concept do Victoria and her friends need to apply to find out their expected revenue? Shows the relationship between the price of a good and the quantity that all consumers together are willing to buy.
When the firms in the industry are just able to cover their cost of production, economic profit is zero. Therefore, if demand falls, causing prices to go down even a little bit, all of the firms in the industry will be driven out of business
In the past couple of years, there was much talk about the possibility of Greece leaving the euro zone and reinstating its earlier currency, the drachma. If Greece did leave the euro zone and reinstate the drachma, what do you think the US$/drachma e..
If we believe that the laws of supply and demand always hold, explainc why is it that the 'popular' gifts for the holidays always sell out early?
What would be the total potential gains from trade if the ski resort and the birders were able to negotiate and what are the total net benefits of the economically efficient number of ski resort acres
In a two-player game which of the following is a nash equilibrium
Banks act as financial intermediaries by doing which of the following?A) Converting household savings into business investments in which savings appear as a liability on the banks balance sheet.B) Converting household investments into household savin..
3) Assuming that banks used all their excess reserves to support an increase in the volume of bank lending, by how much would bank lending expand if the Fed undertook the policy action that was your answer to question (2) ?
Assuming that state funding for the universities is held constant, describe the conditions that will prevail if tuition is held below equilibrium price. Provide one (I) example to support your response.
In 2009, the Japanese beer industry was affected by two economic events: (1) Japan's government imposed on producers a tax on all beer sold, and (2) consumer income fell due to the continuing economic recession. How would each factor affect (i.e.,..
for each of the following explain whether it shifts the short-run aggregate supply curve the long-run aggregate supply
Tuition costs are expected to increase at the rate of 8 percent per year. The first year's tuition is due 5 years from now and will cost $6,000. A fund is to be set up today to cover the tuition costs for 4 years in an account that will earn interest..
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