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A consultant gives you the following equation, which represents the demand for new cars as a function of the price of cars, the price of gasoline, and GDP (i.e., income I) Qcars = (Pcars)2.4 (Pgasoline)-1.2 I2 a. What is the elasticity of demand for new cars with respect to the price of cars? Comment on and interpret your answer (i.e., the sign and magnitude of the elasticity).
b. What is the elasticity of demand for new cars with respect to the price of gasoline? Comment on and interpret your answer (i.e., the sign and magnitude of the elasticity).
c. What is the elasticity of demand with respect to income? Comment on and interpret your answer (i.e., the sign and magnitude of the elasticity).
Suppose that the market for radios is perfectly competitive and there is the simultaneous increase in supply and demand. What can be said about the new equilibrium relative to one before the shifts in supply and demand occurred?
Assume buyers in the used car market are willing to pay $3,500 for a plum used car and $1,500 for a lemon used car. If buyers believe that thirty percent of the used cars.
Determine how velocity is affected by an increase in real income (Y), an increase in the nominal interest rate, and an increase in the price level.
Which of the following is a characteristic of both monopolistic competition and perfect competition?
Discuss why is it difficult to estimate who is and who is not in the labor force? What consequence does this have, if any, for the labor market indicator?
Evaluate the impact of the proposal to cut prices and what is the optimal profit-maximizing markup suggested by economic theory?
The government levies an excise tax of five cents per unit sold on sellers in a competitive industry. Supply and demand curves have some elasticity with respect to value.
Gamma corporation one of the firms which retains you as the financial analyst is considering buying out Beta Corporation. Discuss how these data provide evidence of inefficiency. How could the new manager of Beta Corporation improve efficiency?
Determine what are the reporting reasons on why gasoline prices have been fluctuating and trending upward for the past twelve months.
A new competitor enters the industry and competes with a second firm, which had been a monopolist. The second firm finds that although demand is not perfectly elastic, it is now relatively more elastic.
Discuss all of the Pros and Cons of making the decision to buy a new car and we require to consider about macro & microeconomics and any other psychological, sociological or business concepts that may affect the decision.
The law of demand says that the price and quantity demanded are inversely related. Thus, is demand curve positively or negative sloped?
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