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Write a 4- to 5-page essay that addresses the following FOUR questions on the market for milk. (For this Case, keep it simple; don't worry about different brands, etc.) Explain what happens to price and quantity of milk when the following events occur (you do not need to analyze the event itself but rather determine the effect of the event on supply and demand of milk): A scientific study shows that consumption of milk is beneficial for healthy bones. There is an outbreak of mad cow disease. The price of almond milk decreases. In order to promote healthy families, a price ceiling on milk is implemented. Suppose Johnny drinks 4 cups of milk every day no matter what the price. What kind of elasticity does it have? Suppose that when the price of milk increases by 40%, the percentage change in quantity demanded by consumer is reduced by 10%. Calculate the elasticity. Based on your answer to Question 3, What happens to total revenue when the price of milk is increased. Why? Some helpful suggestions on completing the assignment: For each event, you must specify how it effects either demand, quantity demanded, supply, or quantity supplied. It is also important to demonstrate how the change will affect the market demand or supply curve. Also, be sure to state any assumption you are making regarding the relationship of the event and milk. Here is an example of the best way to answer question #1 above: Event: Price of cereal decreases. Assume that cereal is a complement for complement. If cereal is cheaper, then the consumer will increase quantity demanded of cereal. If consumers buy more cereal, then there will be an increased demand for milk because it is its complement. This event causes a shift of the demand curve to the right. The shift will cause price and quantity of milk to increase. Here is also some helpful information on how to address the elasticity questions: Inelastic goods (goods in which consumers are less responsive to changes in price): e < |-1| Elastic goods (goods in which consumers are more responsive to changes in price): e > |-1| In this course, we use the absolute value of elasticity. The price elasticity of demand is always calculated as a negative value due to the law of demand (inverse relationship between price and quantity). Assignment Expectations Use concepts from the modular background readings as well as any good-quality resources you can find. Be sure to cite all sources within the text and provide a reference list at the end of the paper. Length: 4-5 pages double-spaced and typed. The following items will be assessed in particular: Your ability to understand an application of supply and demand. Some in-text references to the modular background material (APA formatting not required). The essay should address each element of the assignment. Remember to support your answers with solid references including the Case readings.
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Elucidate what are some measures of total ouput on the horizontal axis of the AS/AD model. Which measure do you think represents the most accurate picture of the output of an economy.
What is the crowding out effect A reduction in private spending as a result of higher interest rates generated by budget deficits that are financed by borrowing in the private loanable funds market.
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To save on gasoline expenses, Edith and Mathew agreed to carpool together for traveling to and from work. Edith preferred to travel on I-20 highway as it was usually the fastest, taking 25 minutes in the absence of traffic delays. Mathew pointed o..
suppose that the average prices of refrigerators have fallen over the past few years yet the refrigerator companies
If the above monopolist were to behave like a perfectly competitive firm (operating in the long run), determine its output.
Get Rich Company has to choose between two investment opportunities. Investment A requires an immediate cash outlay of $100,000 and provides after-tax income of $20,000 per year for ten-years.
Compute the gain from trade but you should discuss how comparative advantage is used.
To try to determine what fee customers were willing to pay for expedited payments, the bank conducted a survey. It was able to determine that many of the people surveyed already paid fees for expedited payment services that exceeded the maximum fe..
2. What will happen to equilibrium income in the following cases a. The mpe is 0.8, and autonomous consumption declines by $200. b. The mpe and mpc are both 0.5, and taxes rise by $400. How much of an increase in government spending would be required
In order for you to be indifferent between the after tax returns on a corporate bond paying 8.5 percent and a tax-exempt municipal bond paying 6.12 percent,
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