Question

Assume cattle are raised for both meat and hides. Ceteris paribus, how would a rise in the demand for meat affect the price of hides?

Group of answer choices

It would lower the price of hides.

It would raise the price of hides.

Here are four statements about how people’s expectations of future prices affect what they do in the current period.

I           If both buyers and sellers expect the price to rise next period, the price would rise

in the current period.

II         If both buyers and sellers expect the price to fall next period, the price would fall

in the current period.

III         If buyers expect the price to rise next period and sellers expect the price to fall next

period, the quantity traded would rise in the current period.

IV        If buyers expect the price to fall next period and sellers expect the price to rise next period, the quantity traded would fall in the current period.

Choose the correct option from the list below.

Group of answer choices

Only I and II are true.

Only I and IV are true.

All four statements are true.

Only II and III are true.

Only III and IV are true.

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Question 71 pts

This question tests your understanding of the market period (also known as the very short run).

At the equilibrium price, the amount by which the total stock exceeds the quantity demanded by buyers is equal to

Group of answer choices

the sellers’ reservation demand

both the options in this list

the quantity supplied by sellers

This question tests your understanding of the market period (also known as the very short run).

At the equilibrium price, the amount by which the total stock exceeds the quantity demanded by buyers is equal to

Group of answer choices

the sellers’ reservation demand

both the options in this list

the quantity supplied by sellers

Here are four statements about (price) elasticities of demand and supply in the market for water.

I           The demand for water is MORE elastic in the short run than in the long run.

II         The demand for water to drink is LESS elastic than the total demand for water for all other purposes.

III       The supply of water is LESS elastic in the short run than in the long run.

IV       The supply of drinking water is likely to be MORE elastic than the supply of water for irrigation.

Choose the correct option from the list below.

Group of answer choices

Only III and IV are true.

Only I and II are true.

Only I and IV are true.

Only II and III are true.

This question tests your understanding of income elasticity of demand.

If the income elasticity of a normal good is LESS THAN ONE, total expenditure on the good

Group of answer choices

decreases as a proportion of total household spending

increases as a proportion of total household spending

remains a constant proportion of total household spending

This question tests your understanding of cross-price elasticity of demand.

11. Which statement below is TRUE? (Choose one.)

A         If two goods are close substitutes, the cross-price elasticity of demand is negative.

B          If two goods are complements, the cross-price elasticity of demand is positive.

Group of answer choices

Both A and B are true.

Only A

Only B

Neither A nor B is true.

Answer 1

1) As the demand for meat increases, more cattle would raise. So the supply of hides would increase. This results in a decrease in the price of hides. The first option is correct.

2) if buyers expect the price to rise in the future, they would prefer to buy now at a lower rate. So current demand will be increased, as a result, the price will be increased. The opposite will happen if buyers expect to fall in price in the future that is price will be decreased now.

If sellers expect the price to rise in the future, they prefer to supply less now at a low price. They will increase stock for the future. So the current supply will be decreased that increases the price. The opposite will happen if sellers expect to fall in price in the future. That is price will fall now as they will supply more in the present.

So if both buyers and sellers expect future prices will be raised, the current price will be increased.

If both buyers and sellers expect the future price will fall, the current price will be decreased

If buyers expect the price to be raised in the future and sellers expect the price to fall in future, the result will be ambiguous.

Therefore only I and ii are true

3)If at the equilibrium price supply exceed the demand, the surplus amount is called sellers reservation demand.

4) The demand for drinking water is less elastic in the short as they have no alternative choice in the short run.

The supply for drinking water is less elastic in the short run as in the short run inputs are fixed and production process is not much efficient.

People have to drink water to survive so the elasticity of demand is less for drinking water than other water demands.

Suppliers have to spend a lot to make drinking water as it relates to our health and irrigation water has not to be processed. So supply of drinking water is less elastic than that of water for irrigation.

Option ii and iii are correct.