Economics Supply and Demand and Price Elasticity Essay Sample free essay sample

1. Pull a circular-flow diagram. Identify the parts of the theoretical account that correspond to the flow of goods and services and the flow of dollars for each of the undermentioned activities. a. Sam pays a storekeeper $ 1 for a quart of milk. b. Sally earns $ 4. 50 per hr working at a fast nutrient eating house. c. Serena spends $ 7 to see a film. d. Stuart earns $ 10. 000 from his 10 per centum ownership of Acme Industrial. 2. What is a competitory market? Briefly describe a type of market that is non absolutely competitory. 3. What are the demand agenda and the demand curve and how are they related? Why does the demand curve incline downward? 4. Popeye’s income diminutions. and as a consequence. he buys more Spinacia oleracea. Is spinach an inferior or a normal good? What happens to Popeye’s demand curve for Spinacia oleracea? 5. What are the supply agenda and the supply curve and how are they related? Why does the supply curve incline upward? 6. Does a alteration in producers’ engineering lead to a motion along the supply curve or a displacement in the supply curve? Does a alteration in monetary value lead to a motion along the supply curve or a displacement in the supply curve? 7. Describe the function of monetary values in market economic systems. 8. List and explicate the four determiners of the snap of demand. 9. How did snap aid explicate why drug interdiction could cut down the supply of drugs. yet perchance increase drug related offenses? 10. For each of the undermentioned braces of goods. which good would you anticipate to hold more elastic demand and why? a. Required text editions or enigma novels b. Beethoven recordings or classical music recordings in general c. Heating oil during the following six months or heating oil during the following five old ages d. Root beer or H2O 11. Suppose that concern travellers and vacationists have the undermentioned demand for air hose tickets from New York to Boston: PRICE QUANTITY DEMANDEDQUANTITY DEMANDED( BUSINESS TRAVELERS ) ( VACATIONERS ) $ 15021001000200200080025019006003001800400 a. As the monetary value of tickets rises from $ 200 to $ 250. what is the monetary value snap of demand for: I ) Business travellers?two ) Vacationers?Use the center method in your computations.B. Why might vacationists have a different snap than concern travellers? 12. The New York Times reported ( Feb. 17. 1996. p. 25 ) that subway ridership declined after a fare addition: â€Å"There were about four million fewer riders in December 1995. the first full month after the monetary value of a item increased 25 cents to $ 1. 50. than in the old December. a 4. 3 percent diminution. † a. Use these informations to gauge the monetary value snap of demand for subway drives. B. Harmonizing to your estimation. what happens to the Transit Authority’s gross when the menu rises? c. Why might your estimation of the snap be undependable? 13. Two drivers–Tom and Jerry–each drive up to a gas station. Before looking at the monetary value. each topographic points an order. Tom says. â€Å"I’d like 10 gallons of gas. † Jerry says. â€Å"I’d like $ 10 worth of gas. † What is each driver’s monetary value snap of demand? 14. Economists have observed that disbursement on eating house repasts declines more during economic downswings than does passing on nutrient to be eaten at place. How might the construct of snap aid to explicate this phenomenon? 15. See public policy aimed at smoke. a. Surveies indicate that the monetary value snap of demand for coffin nails is about 0. 4. If a battalion of coffin nails presently costs $ 2 and the authorities wants to cut down smoke by 20 per centum. by how much should it increase the monetary value? B. If the authorities for good increases the monetary value of coffin nails. will the policy have a larger consequence on smoking one twelvemonth from now or five old ages from now? c. Studies besides find that adolescents have a higher monetary value snap than do grownups. Why might this be true? 16. Explain why the followers might be true: A drouth around the universe raises the entire gross that husbandmans receive from the sale of grain. but a drouth merely in Kansas reduces the entire gross that Kansas husbandmans receive. 17. See a consecutive line demand curve which goes through the points ( p=12. 70. q=2200 ) and ( p=12. 50. q=2300 ) . a. Calculate arc snapB. At each of the two points calculate point snapc. Calculate point snap at a monetary value of 12. 60. 18. See the demand curve P = 300 – . 6Q. Calculate the snap of demand at P = 200. 19. â€Å"An addition in the demand for notebooks raises the measure of notebooks demanded. but non the measure supplied. † Is this statement true or false? Explain. 20. See the market for minivans. For each of the events listed here. place which of the determiners of demand or supply are affected. Besides indicate whether demand or supply is increased or decreased. Then demo the consequence on the monetary value and measure of minivans. a. Peoples decide to hold more kids. B. A work stoppage by steelmakers rises steel monetary values.c. Engineers develop new machine-controlled machinery for the production of minivans. d. The monetary value of station waggons rises.e. A stock-market clang lowers people’s wealth. 21. During the 1990s. technological progress reduced the cost of computing machine french friess. How do you believe this affected the market for computing machine for computing machines? For computing machine package? For typewriters? 22. Because beigels and pick cheese are frequently eaten together. they are complements. a. We observe that both the equilibrium monetary value of pick cheese and the equilibrium measure of beigels have risen. What could be responsible for this pattern–a autumn in the monetary value of flour or a autumn in the monetary value of milk? Illustrate and explicate your reply. B. Suppose alternatively that the equilibrium monetary value of pick cheese has risen but the equilibrium measure of beigels has fallen. What could be responsible for this pattern–a rise in the monetary value of flour or a rise in the monetary value of milk? Illustrate and explicate your reply. 23. An article in The New York Times described a successful selling run by the Gallic bubbly industry. The article noted that â€Å"many executives felt dizzy about the stratospheric bubbly monetary values. But they besides feared that such crisp monetary value additions would do demand to worsen. which would so do monetary values to immerse. † What error are the executives doing in their analysis of the state of affairs? Illustrate your reply with a graph. 24. Emily has decided ever to pass tierce of her income on vesture. a.What is her income snap of dressing demand?B. What is her monetary value snap of dressing demand?c. If Emily’s tastes alteration and she decides to pass merely one-quarter of her income on vesture. how does her demand curve alteration? What are her income snap and monetary value snap now? 25. Pharmaceutical drugs have an inelastic demand. and computing machines have an elastic demand. Suppose that technological progress doubles the supply of both merchandises ( that is. the measure supplied at each monetary value is twice what it was ) . a. What happens to the equilibrium monetary value and measure in each market? B. Which merchandise experiences a larger alteration in monetary value? c. Which merchandise experiences a larger alteration in measure?d. What happens to entire consumer disbursement on each merchandise? 26. Because better conditions makes farmland more productive. farming area in parts with good conditions conditions is more expensive than farming area in parts with bad conditions conditions. Over clip. nevertheless. as progresss in engineering have made all farmland more productive. the monetary value of farming area ( adjusted for overall rising prices ) has fallen. Use the construct of snap to explicate why productiveness and farming area monetary values are positively related across infinite but negatively related over clip. 27. From initial places of equilibrium ( in each instance ) . bespeak the effects of demand and supply alterations ( as indicated ) on monetary value and measure. Individually graph the initial demand and supply curves. so the changed curves. and note the effects on monetary value and measure. Change ofresults inChange of demandsupply pricequantitya. ++B. +=c. +-d. =+e. ==f. =-g. -+h. -=I. – 28. Changes in equilibrium monetary value and measure have been observed–what alterations in supply and demand would account for these observed alterations? ObservedCauses ( s )PriceQuantity SupplyDemanda. + +B. + –c. – +d. – –29. Suppose that the demand for some merchandise is extremely ( monetary value ) rubber band. but non absolutely elastic. and that the supply is ( monetary value ) inelastic. but non absolutely inelastic. If supply decreases. what will go on to entire outgos ( grosss ) on the merchandise? Illustrate utilizing demand and supply curves. 30. Suppose the market demand for pizza is given by [ movie ] and the market supply for pizza is given by [ movie ] . where P=price ( per pizza ) . a. Graph the demand supply agendas for pizza utilizing $ 5 through $ 15 as the value of P. B. In equilibrium. how many pizzas would be sold and at what monetary value? c. What would go on if providers set the monetary value of pizza at $ 15? Explain the market accommodation procedure. d. Suppose the monetary value of beefburgers. a replacement for pizza. doubles. This leads a doubling of the demand for pizza ( at each monetary value consumers demand twice every bit much pizza as earlier ) . Write the equation for the new market demand for pizza. e. Find the new equilibrium monetary value and measure of pizza.