Reference no: EM13861998
Studiesindicate that the income elasticity of demand for servants in the United Statesexceeds 1. However, the number of servants has been decreasing during the last75 years, while incomes have risen significantly. How can these facts bereconciled?<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
b. Universityenrollments have increased substantially during the last recession. Onepossible explanation is that the cost of university education has decreased.However, this in fact is not true. Give two other possible explanations (withat least one of these explanations not relying on explicit costs andbenefits).
2)Assume that the demand for product A is QA= 500 -5 PA + 3 PB, and the demand for product B is QB=300 - 2 PB + PA.
Currently, market prices and quantities for A and B are PA=5,PB=2, QA=481, and QB=301.
a. Suppose the price of Brises to 3. What happens to QB and QA? What is the priceelasticity of demand for product B?
b. Calculate thecross-elasticity of demand between A and B using PB= 2 and 3. Are Aand B complements or substitutes?
3)In the 1990s, the chicken market responded to two specific"shocks":
- Many consumers became awareof the potential health problems associated with eating too much red meat.
- The technology in the feed,hatchery, and breeding stages of producing chickens improved.
a) Show and describe theeffect of these changes on the market for chicken. Clearly identify the new andold prices and quantities.
b) Can you use the (data on)prices and quantities identified in a) to estimate the demand equation forchicken? Can you use them to estimate the supply equation for chicken? Explain
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The inverse demand and supply curves
: A2-9. Suppose the inverse demand and supply curves are given by (where Qs and Qd are quantities P is price): Demand: P = 35 - (1/3) Qd Supply: P = 5 + (2/3) Qs (a) Calculate the equilibrium price and quantity in this market. Graph the demand and sup..
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Difference between the short-run and the long-run
: Explain the difference between the short-run and the long-run with regard to firm behavior. What are fixed and variable factors of production, and how does this distinction relate to the short-run, long-run distinction? How does the concept of sun..
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Influential effect on development of twentieth century art
: Write an analytical essay that identifies, examines, and evaluates three distinct approaches that artists have embraced to respond to the significant changes of the twentieth century. Which approaches would you argue have had the most influential ..
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Federal reserve system has forced short-term interest rates
: What does the term "INTEREST RATE INVERSION" refer to? For the past several years, the Federal Reserve System has forced short-term interest rates to nearly zero. Why has it not been able to do the same for long-term interest rates? Explain.
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The income elasticity of demand for servants
: Studiesindicate that the income elasticity of demand for servants in the United Statesexceeds 1. However, the number of servants has been decreasing during the last75 years, while incomes have risen significantly. How can these facts bereconciled?
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Does private ownership entitle the owners to do anything
: What would happen to the size of the cattle population if Americans decided to eat substantially less beef? Explain the logic underlying your answer. Does private ownership entitle the owners to do anything they want with their property? Why or why n..
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How people interact in markets
: Principles of Economics, and the specific discussion areas include the economic principles that guide how people make economic decisions (choices), how people interact in markets, and how the economy as a whole works.
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Determine the sign of the income and cross-price elasticity
: Suppose the demand function for some good X is given by QDx = 1000 - 5Px + 3Py + 12M, where QDx is the quantity of x demanded, Px is its price, Py is the price of good Y, and M is average consumer income. This good is normal and goods X and Y are sub..
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Budget constraint-opportunity cost of food in terms of gas
: Jim sees commuting by bus and T as perfect substitutes (U = T + B), that is, he would exchange one commute by bus for one commute by T. The price of a bus ticket is $1.50 and the price of a T ticket is $2.00. Explain the relationship between the slo..
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