Question

In: Economics

Suppose the demand and supply curves are described by MC = 2.76 + 1.65Q WTP =...

Suppose the demand and supply curves are described by MC = 2.76 + 1.65Q WTP = 6.45 - 0.78Q

a. Suppose the price of a substitute decreases such that WTP changes by 1.5. Note this change in WTP may be positive or negative. What is the change in quantity demanded if the market price is 4.36?

(indicate the sign of the change here) + -

(Enter only a positive number here)

b. Suppose the price of a complement decreases such that WTP changes by 1.8. Note this change in WTP may be positive or negative. What is the change in quantity demanded if the market price is 4.36?

(indicate the sign of the change here) + -

(Enter only a positive number here)

c. Suppose income decreases and the good is inferior such that WTP changes by 1.7. Note this change in WTP may be positive or negative. What is the change in quantity demanded if the market price is 4.36?

(indicate the sign of the change here) + -

(Enter only a positive number here)

Solutions

Expert Solution

Solution:

a) The change in quantity demanded is (-) 1.923

b) The change in quantity demanded is (+) 2.308

c) The change in quantity demanded is (+) 2.18

Rahul Sunny answered 2 years ago
Next > < Previous

Related Solutions

Suppose the demand and supply curves are described by MC = 2.26 + 1.97Q WTP =...
Suppose the demand and supply curves are described by MC = 2.26 + 1.97Q WTP = 7.16 - 2.35Q. What is the value of producer surplus if the price is 5.26?
Draw supply and demand curves. Assume that these are the supply and demand curves for the...
Draw supply and demand curves. Assume that these are the supply and demand curves for the Microsoft Surface tablet. Draw what happens on this graph when the price of iPads decreases. Surface tablets and iPads are substitute goods. Clearly illustrate and label all equilibrium points, prices, and quantities.
Consider an aggregate supply curve described by MC =5 + Q and an aggregate demand curve...
Consider an aggregate supply curve described by MC =5 + Q and an aggregate demand curve described by MWTP = 20 –2 Q. 2a. What is the consumer surplus in the market equilibrium? 2b. What is the producer surplus in the market equilibrium?
Consider an aggregate supply curve described by MC =5 + Q and an aggregate demand curve...
Consider an aggregate supply curve described by MC =5 + Q and an aggregate demand curve described by MWTP = 20 –2 Q. In addition, there is a negative externality of E = 3 per unit of production. 4a. What is the unregulated market equilibrium quantity? 4b. What is the socially efficient quantity? 4c. What are the total social net benefits of producing the market quantity? 4d. What are the total social net benefits of producing the socially efficient quantity?
Suppose the demand and supply curves of a perfectly competitive market are: Supply: Q = P...
Suppose the demand and supply curves of a perfectly competitive market are: Supply: Q = P - 10 Demand: Q = 90 - P (1) Solve for the market equilibrium (price and quantity at equilibrium) (2) Solve for Welfare (Total Surplus). (3) Suppose a per-unit tax of $10 is imposed in the market. Calculate tax revenue and deadweight loss.
Problems and Applications Q10 A market is described by the following supply-and-demand curves: QS = 4P...
Problems and Applications Q10 A market is described by the following supply-and-demand curves: QS = 4P QD = 400−P The equilibrium price is $ and the equilibrium quantity is . Suppose the government imposes a price ceiling of $90. This price ceiling is , and the market price will be $ . The quantity supplied will be , and the quantity demanded will be . Therefore, a price ceiling of $90 will result in . Suppose the government imposes a...
A market is described by the following supply-and-demand curves: QS = 2P QD = 300−P The...
A market is described by the following supply-and-demand curves: QS = 2P QD = 300−P The equilibrium price is_______and the equilibrium quantity is________. Suppose the government imposes a price ceiling of $90. This price ceiling is [binding/not binding], and the market price will be______. The quantity supplied will be ______ , and the quantity demanded will be_______. Therefore, a price ceiling of $90 will result in [a shortage/ a surplus/ neither a shortage nor surplus]. Suppose the government imposes a...
Question 2 Let’s consider the supply and demand curves for natural gas. Suppose that the supply...
Question 2 Let’s consider the supply and demand curves for natural gas. Suppose that the supply curve is: Qs = 10+ 0.6PG + 0.05PO and the demand curve is: Qd = 0.01−2PG + 0.5PO, where Qs and Qd are the quantities supplied and demanded measured in trillion cubic feet, PG is the price of natural gas in dollars per thousand cubic feet, and PO is the price of oil in dollars per barrel. Suppose that the price of oil is...
Suppose the demand and supply for a product are described by the equations Qd = 1080...
Suppose the demand and supply for a product are described by the equations Qd = 1080 -4P and Qs = -120+8P. a. Find the equilibrium P, Q and elasticities of demand and supply b. If a $6 per unit tax is levied on the demand for the product, find new P, Q and the percent of the tax incidence that falls on consumers and firms. c. Find the tax revenue and welfare loss associated with the tax. d. Now double...
Suppose the demand and supply curves for units of university credits are given by the following...
Suppose the demand and supply curves for units of university credits are given by the following equations: Q D = 5400 − 2P Q S = 3P − 400 where QD is the quantity of credits demanded, QS is the quantity supplied, and P is the price charged for each unit in dollars. (a) (3 points) What is the free-market equilibrium Price and Quantity. (b) (3 points) Suppose that the government wants to make education more accessible and therefore passes...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT