Question

Question 1 A per unit tax on a good which is levied on the consumer will...

Question 1

A per unit tax on a good which is levied on the consumer will usually cause which of the following?

a. The price to rise by somewhat less than the per unit tax

b. The price to rise by the amount of the per unit tax

c. A rotation in the demand curve which changes its slope.

Question 2

Which of the following is/are held constant when writing a demand equation for a good in the form         Qd = a + b*P?

a. The own price of the good.

b. The quantity demanded of the good.

c. The income of the potential consumers of the good.

Question 3

When a government imposes a price ceiling below the market price on a product or service, which of the following happens?

a. Total consumer surplus rises because consumers now pay less for the product

b. A shortage of supply relative to demand results

c. The total amount of the product or service that is traded in the market rises due to the lower price

Question 4

The demand function for a pair of a popular new brand of athletic shoe has been estimated to be as follows:

Qd = 500 – 2.5*Po + 1.5*Pc + .5*I + .02*A

Where Po is the own price of the pair of shoes, Pc is the price of a pair of close competitor’s shoes, I is the average income in the area measured in thousands of dollars, and A is spending on advertising measured in millions of dollars. At the current time, the new shoes are priced at $125 a pair, a pair of the competitor’s shoe is selling for $100, I = 37.5 and A = 5 .

The approximate price elasticity of demand for the new shoe is:

a. -2.5

b. -.87

c. 1.0

Question 5

A ‘Slide’ along a demand curve for a good is the result of which of the following?

a. A change in the own price of the good

b. An increase in the cost of producing the good

c. A change in the quality of the good

Question 6

The demand function for a pair of a popular new brand of athletic shoe has been estimated to be as follows:

Qd = 500 – 2.5*Po + 1.5*Pc + .5*I + .02*A

Where Po is the own price of the pair of shoes, Pc is the price of a pair of close competitor’s shoes, I is the average income in the area measured in thousands of dollars, and A is spending on advertising measured in millions of dollars. At the current time, the new shoes are priced at $125 a pair, a pair of the competitor’s shoe is selling for $100, I = 37.5 and A = 5 .

The income elasticity of demand indicates that the new shoe is:

a. An inferior good

b. A normal good

c. A luxury good

Question 7

Producer surplus is:

a. The area above the supply curve below the equilibrium price line

b. The area above the supply curve and beneath the demand curve to the left of the equilibrium point

c. Revenue minus fixed costs

Question 8

If a supply curve of a product is a vertical line, what does that suggest about the supply of that product?

a. Supply is fixed at a given quantity and cannot be increased despite changes in the price of the product

b. There is no supply available for the product

c. Supply of the product is infinitely elastic

Homework Answers

Answer #1

1)

Answer: (A)

Since here burden of tax is divided between the buyer and seller. Hence price rises but somewhat less than the per unit tax.

2)

Answer: (A)

It showing relationship between quantity demanded and price of substitutes. Hence, it is assumed that own price of good is constant.

3)

Answer: (B)

Shortage of supply relative to demand will result. Since price is below the equilibrium level, hence producers do not have incentives to supply right quantity at this level, hence supply shortage emerges.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Suppose the supply curve for a product is given by the equation QS = 1000 +...
Suppose the supply curve for a product is given by the equation QS = 1000 + P, where price P is measured in dollars and quantity Q is measured in number of units. 1. Now suppose that the demand curve is given by the equation QD = 9000 - P - 0.05I, where I is income measured in dollars. If income is $100,000, what is the current equilibrium price and quantity? 2. Suppose that income falls from $100,000 to $80,000....
Dan’s preferences are such that left shoes (good x) and right shoes (good y) are perfect...
Dan’s preferences are such that left shoes (good x) and right shoes (good y) are perfect complements. Specifically, his preferences are represented by the utility function U (x, y) = minimum{x, y}. (a) Draw several of Dan’s indifference curves. Which bundles are at the “kink- points” of these curves? (b) Assume that Dan’s budget for shoes is M = 10 and that the price of a right shoe is py = 2. Find and draw Dan’s demand curve for left...
QUESTION 4 Suppose the market supply for Good X is given by QXS = -100 +...
QUESTION 4 Suppose the market supply for Good X is given by QXS = -100 + 5PX. Compute and illustrate with completely labelled diagram the producer surplus if the equilibrium price of X is $100 per unit (show the relevant calculation). The daily market demand and supply for beef in New york is given by: Qd= 16,000 – 1,000P Qs=   2,000 + 1,000P The quantity and price are measured in tonnes and Dollars, respectively. Determine the equilibrium quantity and price...
On a graph of a demand curve, total consumer surplus equals:     A-the demand curve. B-the...
On a graph of a demand curve, total consumer surplus equals:     A-the demand curve. B-the area above the demand curve and beneath the market price. C-the market price. D-the area beneath the demand curve and above the market price. Total producer surplus equals:     A-the area above the supply curve and beneath the market price. B-the area beneath the supply curve and above the demand curve. C-the market price. D-the supply curve. An increase in supply refers to:    ...
Question 6 The demand for good x is given by x ∗ = 60 − 4Px...
Question 6 The demand for good x is given by x ∗ = 60 − 4Px + 2M + Py, where Px is the price of good x, Py is the price of good y, and M is income. Find the own-price elasticity of demand for good x when Px = 20, Py = 20, and M = 100. Is x an ordinary or giffen good? Explain. Question 7 The demand for good x is given by x ∗ =...
Question 1: The substitution effect of a price decrease for a good with a normal indifference...
Question 1: The substitution effect of a price decrease for a good with a normal indifference curve pattern is graphed by a. drawing a new budget line tangent to the indifference curve attained at the new price. b. drawing a new budget line tangent to the original indifference curve but at the slope of the new price of the good. c. drawing a new budget line parallel to the initial budget line but tangent to the indifferent curve attained at...
1. Consider the following demand and supply functions for a good or service: Qd = 400...
1. Consider the following demand and supply functions for a good or service: Qd = 400 - 5P and Qs= 3P. a) Graph the supply and demand functions in the typical manner with price per unit (P) on the Y-axis and quantity on the X-axis. Make sure to clearly mark X-intercept and Y-intercept on the graph. b) What is the slope of each line? Show your calculations. c) What is the equilibrium price and quantity? Show your calculations. Show the...
Using demand and supply analysis, illustrate how each of the following scenarios would affect the equilibrium...
Using demand and supply analysis, illustrate how each of the following scenarios would affect the equilibrium price and quantity in the respective markets. The use of carefully labelled diagrams is required with an explanation. a. The introduction of a new technology reduces the cost of production for all firms in the computer market. b. A strong advertising campaign has caused the consumer to demand more Pepsi at every existing price. c. The passage of Dorian a category 5 hurricane destroys...
Question 1: Consider a perfectly competitive market in good x consisting of 250 consumers with utility...
Question 1: Consider a perfectly competitive market in good x consisting of 250 consumers with utility function: u(x,y) = xy Denote Px to be the price for good x and suppose Py=1. Each consumer has income equal to 10. There are 100 forms producing good x according to the cost function c(x)=x^2 + 1. a) Derive the demand curve for good x for a consumer in the market b) Derive the market demand curve for good x C) Derive the...
Question: Suppose you have been hired by a research firm trying to understand the market for...
Question: Suppose you have been hired by a research firm trying to understand the market for Widgets (a hypothetical product). Your analysis of the data indicates that the Demand curve for Widgets is estimated to be linear and given by equation Qd = 100 – P and the Supply curve for Widgets appears to be linear as well and is estimated as Qs = 3P – 20. Graphically draw these two curves, labeling all relevant points (such as intercepts for...