For each of the following separate parts, you are required to draw one or two graphs....

For each of the following separate parts, you are required to draw one or two graphs.

(a.) Draw two graphs to compare the price elasticity of supply of (i) diamond vs (ii) clothing.

(b.)A country builds universities and casinos. The country spends all the money to build universities now, show how this current choice affects the future PPF of the country.

(c.) Consider the market for gasoline. Suppose the price of electric cars decreases, draw a graph to show the change in equilibrium of the market for gasoline.

(d.) Good A is a necessity, and it is also an inferior good. Draw a graph to show the demand curve of good A and how the demand curve changes if household incomes increase. (Hint: is the demand curve steep or flat?)

Solutions

Expert Solution

a) Price elasticity of supply of diamond is highly elastic. Because the producer gets long period of time to response to the change in price. So it's supply is highly elastic. And also there is few substitutes for diamond. So the price elasticity of supply of diamond is highly elastic.

At the same time the price elasticity of supply of clothing is less elastic. Because it has more substitutes.

The following graph shows the price elasticity of supply of diamond and clothing

B) The country has the following production possibility frontier ( PPF) because there is increasing opportunity cost. They sacrifice more casinos for produce universities.

C) When the price of electric cars are decreased then the demand for electric cars are increased. Then the demand for gasoline decreased. The following graph shows the old equilibrium of the gasoline market is e and the new equilibrium is e1 because the demand curve is shifted to D1.

D) Good A is a necessity good so the demand curve is upward sloping because the good is necessary so when price rises demand doesn't fall.

Good A is an inferior good so when income increase the demand for good A decreases. So the demand curve is shifted downwards and it is steeper.

The following diagrams show the demand curve of good A and the change in demand of the good due to increase in income.

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

For each of the following separate parts, you are required to draw one or two graphs....

For each of the following separate parts, you are required to draw one or two graphs. (a) Draw two graphs to compare the price elasticity of supply of (i) diamond vs (ii) clothing. (b) A country builds universities and casinos. The country spends all the money to build universities now, show how this current choice affects the future PPF of the country. (c) Consider the market for gasoline. Suppose the price of electric cars decreases, draw a graph to show...

For each of the following separate parts, you are required to draw one or two graphs....

For each of the following separate parts, you are required to draw a graph. (a) Consider...

For each of the following separate parts, you are required to draw a graph. (a) Consider the market for oil. Suppose the government provides subsidies for companies to use renewable energies. Draw a graph to show how the price elasticity of demand for oil will change. (b) A country produces blueberry pies and pumpkin pies. Suppose a disease occurs, which significantly reduces the farm yield of blueberries. The disease does not affect the production of pumpkins. Draw a graph to...

3. Draw completely labeled Supply or Demand graphs. Draw a separate graph for each question. Answer...

3. Draw completely labeled Supply or Demand graphs. Draw a separate graph for each question. Answer the following questions by showing which way which curve moves: a. What happens to YOUR demand curve for macaroni and cheese after you graduate and get a better paying job? b. When the price of olive oil goes up, what probably happens to the demand for corn oil? c. When the price of petroleum goes up, what probably happens to the demand for natural...

Each of parts (a) to (e) below contain separate statements that you are required to answer separately.

Each of parts (a) to (e) below contain separate statements that you are required to answer separately. For each of the statements indicate whether it is TRUE or FALSE and briefly explain your reasons with reference to legislation, case law or rulings (as appropriate).A taxpayer with an Australian domicile will not always be considered a tax resident of Australia.The second positive limb for the general deductions provision in section 8-1(1)(b) ITAA97 imposes a stricter nexus test than for the first...

Draw two separate graphs that show the Fed’s response in the case of a short-run aggregate...

Draw two separate graphs that show the Fed’s response in the case of a short-run aggregate supply shock, one in the case of prioritizing inflation and the other in the case of prioritizing output stabilization, in the AS-AD framework.

1. Draw two separate graphs that show the “do nothing” or classical approach and the active...

1. Draw two separate graphs that show the “do nothing” or classical approach and the active monetary policy or Keynesian approach in the case of an aggregate demand shock in the AS-AD framework. Briefly explain the steps involved in the Fed’s monetary response.

9. Draw two separate graphs that show the Fed’s response in the case of a short-run...

9. Draw two separate graphs that show the Fed’s response in the case of a short-run aggregate supply shock, one in the case of prioritizing inflation and the other in the case of prioritizing output stabilization, in the AS-AD framework. Briefly explain the steps involved in the Fed’s monetary response.

Notes: Draw separate diagrams for answers to each part of different questions and label graphs according...

Notes: Draw separate diagrams for answers to each part of different questions and label graphs according to question (a, b, & c). Do not combine all your answers on one graph. All of your answers should be based on your graphical analyses. Your written explanations should complement what you draw on your graphs. Thank you!! 2- [War on drugs- 30 points] War on Drugs refers the U.S. federal government's campaign of prohibition of drugs, military aid, and military intervention, with...

Notes: Draw separate diagrams for answers to each part of different questions and label graphs according...

Notes: Draw separate diagrams for answers to each part of different questions and label graphs according to question (a, b, c, d, & e). Do not combine all your answers on one graph. All of your answers should be based on your graphical analyses. Your written explanations should complement what you draw on your graphs. Thank you!! 3- [Minimum Wage – 50 points] The purpose of a minimum wage is to increase the standard of living of workers who are...

Subjects