Reference no: EM13942885
1. Assume that a market is in equilibrium. Show with help of demand and supply curve that the market is in equilibrium.
a. Do a comparative static analysis in the short run if the supply of the good is decreased due to decrease in energy price.
b. Do a comparative static analysis in the long run if the supply of the good is decreased due to decrease in energy price.
c. Analyze and show what happen with consumer surplus and producer surplus in question a and b.
2. Annual demand and supply functions for the Entronics Company are given by:
QD = 5 000 + 0,5 I + 0,2 A - 100P, and QS = 1000 + 100P
where QD is the quantity demanded per year, QS is the quantity supplied, P is price, I is income per household, and A is advertising expenditure.
a. If A = $50 00 and I = $50 00, what is the demand curve? Calculate price elasticity of demand, both arc and point elasticity. What is the difference between point and arc elasticity. Have you got same or different results for these two measures? Explain why!
b. Given the demand curve in part a., what is equilibrium price and quantity? Calculate consumer surplus and producer surplus.
c. Assume that income (I) is increased by 10 percent. Find the short run and long run equilibrium price and quantity and calculate consumer surplus and producer surplus.
d. Find the point on the inverse demand function of QDO where unitary elasticity of demand, Ep=-1.
3. In the excel sheet dataassignment2_20160116, a set of data is provided. In this exercise, you have to run different regression to find out the best model or demand function for good A. Step 1: Run a regression with Y as depended variable and X1, X3, X4 and X6 as independent variable.
Step 2: Generate a variable InY=In(Y). This implies that you create a new variable by taking the natural logarithm of Y variable. Run a regression with InY as depended variable and Xl, X3, X4 and X6 as independent variables.
Step 3: Generate the other variable as InX1=In(X1), InX3=In(X3) and InX6=In(X6). This implies that you create three new variables by taking the natural logarithm of the variables Xl, X3 and X6 respectively. Run a regression with InY as depended variable and InX1,In X3, X4 and InX6 as independent variables.
Choose the best model based on statistical criteria and your economic knowledge. Motivate your answer. Make comment on assumption(s) that are violated and the consequences of the violation of assumption in different models. You have to comment on all the coefficients, t- and F-statistics, R2, adj¬R2 and NOVA-table for all of the three models and compare these statistics. You will have to give a vivid economic and statistical analysis on all of the three models.
Attachment:- dataassignment2_20160116 (1).xlsx
|
Determine amount of water removed during each time interval
: In a wood chemistry/wood physics lab, we were asked to place a piece of wood that contained approx. 64% moisture content in a hydraulic press where we applied a constant 400 psi pressure and applied a constant 400 degrees F of heat. We inserted a ..
|
|
Bill gates-warren buffett on success
: This video highlights Bill Gates and Warren Buffett and how they approach investments. Both CEOs (and both successful) have very different philosophies with respect to investments. Learn about the men and their approaches to conducting business.
|
|
Comparing stock screeners
: There are two primary stock screeners available to beginning investors which are easy to access:
|
|
What are the elements of a strategic staffing diagnostic
: What are the elements of a strategic staffing diagnostic model? That is, a structured approach to determining where the personnel needs of the organization exist?
|
|
Calculate price elasticity of demand
: If A = $50 00 and I = $50 00, what is the demand curve? Calculate price elasticity of demand, both arc and point elasticity. What is the difference between point and arc elasticity. Have you got same or different results for these two measures? Ex..
|
|
Problem regarding the culture jam
: Culture Jam is a manifesto against what author Kalle Lasn views as the hijacking of culture by corporate interests and consumerism. If you disagree with Lasn, you may have had more optimistic thoughts about popular culture as you read.
|
|
The percentage change in the price of luxury cars
: The percentage change in the price of luxury cars is less than the percentage change in the quantity demanded.
|
|
What are the reasons for their development
: Is it a good thing to allow companies other than the manufacturer to extend your browser software?
|
|
What is the energy in btu needed to accomplish
: 100 gallons per minute flow of water at 50 degrees F passes through a theoretically 100% efficient heat exchanger. The hot side or energy to the heat exchanger is a 510 degree F hot gas (essentially steam).
|