7. Assume a normally shaped demand curve. The government wishes to help people onto the housing ladder, and so asks banks to reduce the interest rate on mortgages. What is the effect of this policy on price and equilibrium number of houses in scenario one?
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- If a 10 decrease in the price of one product that you buy causes an 8 increase in quantity demanded of that product, will another 10 decrease in the price cause another 3 increase (no more and no less) in quantity demanded?5. Assume a product's demand is Price = -(3/4) * Quantity + 12 [or P = -(3/4)*Q+12]. Fill in the demand schedule (i.e., pick quantities [0, 4, 8, 12 etc.] and find the associated prices) and plot demand on the graph (also label graph axes with the traditional measures for demand graphs) Page 3 Quantity Price 13 12 11 10 9- 8 7 6 5 4 3 2 1 0 0 2 4 6 8 10 12 14 16 18 20 223 4 The demand x is the number of items that can be sold at a price of $p. For x= p* - 3p° + 1500, find the rate of change of p with respect to x by differentiating implicitly. ..... The rate of change of the price p with respect to the demand x is
- 5. Discuss in detail, demand function and its factors.2. Complete the demand schedule below for the given equation Qd 750 -10P at given prices P12.00, PI5.00, P18.00, P21.00, and P24.00. Price (x) In Php Quantity Demanded ty) 12.00 15.00 18.00 21.00 24.00 Required: a. Complete the table b. Plot the schedule on a graph c. Determine the alope d. Interpret the slope e. Answer the following questions: 1. What is the maximum amount people would want product? 2. If the price rises to P30.00 from an original price o P24.00, what would be the change in the quantity demanded by consumers? 3. IE the quantity demanded of the product changed by 60 units, how much was the change in price? 4. If the price is expected to increase by P25.00, what would be the expected impact to the quantity demanded of the product? eant for this6. When a good is normal:(a) An increase in income raises consumption at each price, so the demand curve shifts tothe left(b) An increase in income raises consumption at each price, so the demand curve shifts tothe right(c) A decrease in income lowers consumption at each price, so the demand curve shifts tothe right(d) An increase in income lowers consumption at each price, so the demand curve shiftsto the left.
- 1. Predict the impact on equilibrium price and quantity for the relevant market given the following changes. 1. What will happen in the market for home computers if: a)consumers become more familiar with the use and benefits of home computers. b)there is a technological cost saving breakthrough in producing home computers. c) both (a) and (b) occur simultaneously. Please support with a graph.1. Explain, using supply and demand analysis, why the price of sugar has been increasing recently.Question 8 Price 1.50 1.25 1.00 0.75 0.50 0.25 P₂ P₁ D O Mark this question Quantity 1 2 3 4 5 6 7 8 9 10 11 12 Assuming ceteris paribus, what principle behind the law of demand is this graph illustrating? Barring special circumstances, a decrease in price will have no effect on an increase or decrease in quantity. Barring special circumstances, an increase in price will always lead to a decrease in quantity. Barring special circumstances, an increase in price will always lead to an increase in quantity. Barring special circumstances, a decrease in price will always lead to a decrease in quantity.
- 5. Which of the following statements is (are) correct? (x) Insulin for insulin-dependent diabetics tends to have an inelastic demand because there are not many close substitutes for insulin and insulin is considered by some to be a necessity (y) The demand for strawberry ice cream is less elastic than the demand for ice cream because there are less substitutes for strawberry ice cream than ice cream. (z) If a good is a luxury, demand for the good would tend to be elastic and the demand curve for the good would tend to be relatively flat. A. (x), (y) and (z) В. (x) and (y) only (x) and (z) only (y) and (z) only E. (x) only6. Determinants of price elasticity of demand Consider some determinants of the price elasticity of demand: The availability of substitutes • The market used to measure demand • The share of budget spent on the product • The time horizon being considered A good without any close substitutes is likely to have relatively the price of the good rises. The price elasticity of demand for a good also depends on how broadly the good is defined. Organize the goods found in the following table by indicating which is likely to have the most elastic demand, which is likely to have the least elastic demand, and which will have a demand elasticity that falls in between. Categories Most Elastic In Between Least Elastic Beverages Wine Merlot demand, because consumers cannot easily switch to a substitute good if Price elasticity for a good also depends on the share of a consumer's budget spent on a good. Other things being equal, which of the following goods has the most elastic demand? TV and Internet…3. Draw a supply and demand curve for your P favorite product. You get a massive raise at work, what happens to the supply or demand for that product? Why?