Q.3 Suppose there are three types of Apples A, B and C being sold and consumed. The demand and supply equations for each type are: D = 20– 2P, + 4P, + P. S, = 4P,-5 D, = 10 + 3P, - 5P, + 2P. S, = 3P, -7 De = 70+4P, + 2P, - 5P. Sc = 5P. – 16 Determine equilibrium prices and quantities using Cramer's rule. • Calculate the elasticity of demand for B with respect to prices of variety A, B and C and interpret the economic meaning of the results.
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- What is the rule relating the ratio of marginal utility to prices of two goods at the optimal choice? Explain why, if this rule does not hold, the choice cannot be utility-maximizingWho determines how much utility an individual will receive from consuming a good?Figure 4.2 P3 P2 P1 A C Q Q2 Q3 Q4 Qs Qs Q7 Refer to Figure 4.2. The demand curve A indicates that O the smallcst price change will cause consumcrs to change their consumption by a large amount, O therc is no change in quantity demandcd as the price changes. consumcrs can purchase any quantity they want regardless of the price, Oithc smalcst price incrcasc wil.causc.consuners to switch to the producer with thc lowest
- The above figures show the market for gasoline. Which figure(s) shows the effect of an increased preference for cars that are smaller and more fuel efficient? DI 这些 D2 D2 D₁ Quantity (gallons of gas) Quantity (gallons of gas) Figure A Figure B Price (dollars per gallon) S2 她 Quantity (gallons of gas) Figure D Quantity (gallons of gas) Figure C O Figure A O Figure B O Figure C O Figure D Price (dollars per gallon) S26. 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.Suppose that California wildfires destroy one-third of the grape crop in the state. What would be the expected effect on the market for raisins? O increase in equilibrium price, increase in equilibrium quantity O decrease in equilibrium price, increase in equilibrium quantity decrease in equilibrium price, decrease in equilibrium quantity no change in the market for raisins increase in equilibrium price, decrease in equilibrium quanttiy
- 14. Determinants of Supply and Demand Consider the market for electric cars. Assume electric cars are a normal good. For each of the following events, identify which of the determinants of demand or supply are affected. If demand is unaffected by this event because it creates only a supply change, select the "None" option under the "Demand Determinant column. Similarly, if supply is unaffected by this event because it creates only a demand change, select the "None" option under the "Supply Determinant" column. Event Demand Determinant Supply Determinant Engineers develop new automated machinery for the production of electric cars. People increase their concern for the environment. An economic boom raises people's wealth. A strike by aluminum workers raises the price of aluminum. The price of gas-powered cars falls. Show the effect of the following event on the market for electric cars: Engineers develop new automated machinery for the production of electric cars. Supply Demand Supply…4. URGENT Given that maximize utility of two goods, x and y, is where MUx/Px=MUy/Py MUx/MUy=Px/Py , where MU is marginal utility, and P is price. a. Explain what happens to the marginal utility of x, when more of x is consumed. b. Explain what a rational person should do when MUx/Px>MUy/Py , and how each MU, and MU/P changes or not. c. Graph and explain the intercepts and the slope of the budget line (constraint) when the budget is 100 and the price of x is 5 and the price of y is 4. d. Graph and explain an indifference curve that is tangent to a budget line. This is a general graph with no numbers.Consider a situation with two goods. Which of the following statements are true, which are false? If a good is a Giffen good, then it is an inferior good. O True O False A good is a Giffen good if the demand for this good decreases O True False when income increases. A good is an inferior good if the demand for this good increases when its price increases. O True False
- 7 Asen tries to minimize his cost of using two goods x subscript 1 end subscript and x subscript 2 end subscript. The price of the first good is BGN 12 and the second good BGN 8. His utility function is x subscript 1 superscript 3 divided by 5 end superscript x subscript 2 superscript 2 divided by 5 end superscript and the utility he will get from using both goods, is 32 units. Find the Hicks quantities demanded and what Assen's minimum budget must be to consume these quantities and obtain the above utility. e-412, h2=21, h1=21 e=416, h2=21, h1=21 e=640, h1=32, h2=32 e=422, h2=21, h1=21 e=378, h2=21, h1=21 e-378, h2=20, h1=20 another answer e-378, h2=24, h1=24You are choosing between two goods, X and Y, and your marginal utility from each is shown in the following table. Units of X MUx Units of Y MUy 1 10 1 8 2 8 2 7 3 6 3 6 4 4 4 5 5 3 5 4 6 2 6 3 a. If your income is $9 and the prices of X and Y are $2 and $1, respectively, what quantities of each will you purchase to maximize utility? ______units of X and ______units of Y b. What total utility will you realize? ______utils c. Assume that, other things remaining unchanged, the price of X falls to $1. What quantities of X and Y will you now purchase? _____units of X and ______units of Y d. Using the two prices and quantities for X, complete the table to derive the demand schedule (a table showing prices and quantities demanded) for X. Instructions: Start with the highest price first Price of X Quantity Demanded of X $ $Suppose that coconuts and bananas are complements in consumption. Suppose further that the price of coconuts decreases while, at the same time, a fungal disease kills ten percent of the world's banana crop. Everything else held constant, the equilibrium price of bananas will equilibrium quantity of bananas transacted will and the Select one: O A. be ambiguous; be ambiguous O B. be ambiguous; increase O C. decrease; be ambiguous O D. decrease; increase O E. increase; decrease OF. decrease; decrease O G. be ambiguous; decrease O H. increase; be ambiguous increase; increase