(a) With the aid of a diagram, explain the meanings of ‘pecuniary price”, ‘non-pecuniary price’ and “full-economic price” by using this example.

(b) Explain why economic efficiency is not achieved even all tickets were sold out.

(c) Explain why profit-seeking concert organizers do not raise prices.

Calculate the price elasticity of supply for each of the following combinations of

price and quantity supplied, using the midpoint formula (arc elasticity). In each

case, determine whether supply is elastic, inelastic, perfectly elastic, perfectly

inelastic, or unit elastic.

c. Price falls from $2.25 to $1.75; quantity supplied remains at 600 units.

d. Price increases from $1.75 to $2.25; quantity supplied increases from

466.67 units to 600 units.

The price of a European call that expires in six months and has a strike price of $28 is $2. The underlying stock price is $27, and a dividend of $0.50 is expected in two months and again in five months. The continuously compounded interest rate is 10%. What is the price of a European put option that expires in six months and has a strike price of $28?  Explain the arbitrage opportunities in the earlier problem if the European put price is $3.25.

The price of gasoline is $2.00 and the price elasticity of demand is -0.4.

a)How much will a 10% reduction in quantity placed on the market increase the price?

b) If -0.4 is a short run elasticity, do you expect that this price increase brought about by this reduction in quantity will be more of less in the long run? Why?

Show work.

• In the summer of 1979, our government imposed a ‘price ceiling” - or price control—on gasoline. Why did they do this? What was their goal? 2. What went wrong, exactly? 3. Often, when the price of a product or service is held “too low”, a shortage develops and ‘FOUR ALTERNATIVE FORMS OF ALLOCATION’ must step in to take the place of the price system (the ‘highest bidder’ system). What are these four alternative methods? Please describe each one. 4. Which one of these four methods, in your opinion, may impose the GREATEST HARM upon our society and our economy? Why? Please give an example, perhaps one that discusses how some people are responding to the pandemic.

The ECON3305 company was considering a price increase and wished to determine the price elasticity of demand (arc elasticity of demand). An economist and a market researcher, Sandy and you, were hired to study demand. In a controlled experiment, it was determined that at 8 cents, 100 pencils were sold while at 10 cents, 60 pencils were sold, yielding an elasticity of 2.25. However, Sandy and you were industrial spies, employed by the EF Pencil Co. and sent to ECON3305 to cause as much trouble as possible. So Sandy and you decided to change the base for their elasticity figure, measuring price in terms of dollars instead of pennies (ie., $0.08 for 8 cents and $0.10 for 10 cents).  How will this sabotage affect the results? You must show all your work and explain your answer in detail to get credit. Make sure you show formula used in your answer. If you do not show the formulas used, you will receive only partial credit.
your answers in detail by covering the inelastic and elastic demand curves. Make sure you define the meaning of the elastic and inelastic demands.

A government that imposes a price floor above the equilibrium price of a good will cause:

Assume a price floor is imposed in the market for milk at the current equilibrium price, and that a price ceiling is imposed in the market for natural gas at the current equilibrium price. What will a decrease in demand for both milk and natural gas create?

a. Shortages in both the milk and natural gas markets.

b. Surpluses in both the milk and natural gas markets.

c. A surplus in the milk market and a shortage in the natural gas market.

d. A shortage in the natural gas market and increase the quantity traded in the milk market.

e. A surplus in the milk market and a decrease in the quantity traded in the gas market

Please explain each step in detail to ensure I understand the process.

The average price of a television on a certain Web site is ​$840. Assume the price of these televisions follows the normal distribution with a standard deviation of $160.

Complete parts a through d below.

a. What is the probability that a randomly selected television from the site sells for less than ​$700?

​(Round to four decimal places as​ needed.)

b. What is the probability that a randomly selected television from the site sells for between

​$400 and ​$500?

​(Round to four decimal places as​ needed.)

c. What is the probability that a randomly selected television from the site sells for between

​$900 and ​$1,000​?

​(Round to four decimal places as​ needed.)

d. There are 13 televisions on the site. How many televisions are within a ​$800

​budget? There are nothing televisions on the site that are within a ​$800 budget.

​(Round down to the nearest whole​ number.)

An exotic option, with exercise price of £8.50, was written on a stock whose price at opening of the contract was £9. When the option expired the stock price was £7. The stock price fell below the value of £6.50 during the option’s life and the option paid off £1.50 at maturity. Which of the following best describes the option?

1. Down-and-in-put

2. Up-and-input

3. Down-and-outcall

4. Gapput