By how much would total demand fall

Assignment Help Financial Accounting

Reference no: EM131197968

Question:

Four firms have roughly equal shares of the market for farm-raised catfish. The price elasticity of demand for the market as a whole is estimated at -1.5.

1. If all firms raised their prices by 5 percent, by how much would total demand fall?

2. What is the price elasticity if a single firm raises its price (with other firms' prices unchanged?

Hint: Use the expression for elasticity in equation 3.8b, E P = (dQ /dP)(P/Q), and note that the individual firm's output Q 1 is only one-quarter as large as total output Q.

3. Suppose that the quantity supplied by the four firms is forecast to increase by 9 percent. Assuming that the demand curve for catfish is not expected to change, what is your forecast for the change in market price (i.e., what percentage price drop will be needed to absorb the increased supply)?

Reference no: EM131197968

Questions Cloud

How well quantity theory of money predict effect of increase : Banks and savings and loans were allowed to issue NOW accounts nationwide in 1981. An unexpected result was that the relationship between the growth of M1 and GDP broke down. If the relationship between the money supply and the level of economic acti..

Which is true about an integrity-based culture : Which of the following is true about an integrity-based culture? Which of the following cultures will empower legal counsel and audit offices to mandate and to monitor conformity with the law and with internal codes?

Procedure for a healthcare organization : Could someone help me find a listing of expenses by diagnosis or by procedure for a healthcare organization? I have tried to google but could not find anything.

Marginal rate of substitution function : For each of the following utility functions, find the marginal rate of substitution function, MRS, and plot the indifference curve for which the consumer reaches a utility level of U = 10.

By how much would total demand fall : If all firms raised their prices by 5 percent, by how much would total demand fall?- What is the price elasticity if a single firm raises its price with other firms' prices unchanged?

School officials conclude that great majority of parents : Flawed reasoning. Identify the flaw in reasoning in the following scenarios. Explain what the individuals in the study should have done differently if they wanted to make such strong conclusions. Based on these results, the school officials conclude ..

Compute the population size that is compatible : Compute the population size that is compatible with the maximum sustainable yield. What would be the size of the annual catch if the population were to be sustained at this level?

Calculation of component values : Assessment Title: Lab Report - 555 timer with filter. Design: PWM design- Give reasons for the specific design presented and used and Calculation details of frequency, duty cycle, and component values. Filter design - Calculation of component values

Estimate the cost of a 40-kw unit of the same general design : Estimate the cost of a 40-kW unit of the same general design. Include the cost of the $18,000 pre compressor.

User Account

All Pages