Question

Assume that advertising shifts the demand curve for jeans to the right along the supply curve...

Assume that advertising shifts the demand curve for jeans to the right along the supply curve which pushes the jean price up by 125%. If the old equilibrium price of jeans is $8.76/pair and the old equilibrium quantity is 230 million pair, the elasticity of jean supply is 0.60 and the elasticity of demand is -0.766, what is the new equilibrium quantity demanded of jeans? What is the new equilibrium quantity supplied?

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Elasticity of demand = % Change in quantity demanded / % Change in price

- 0.766 = % Change in quantity demanded / 125%

% Change in quantity demanded = 125% x (-0.766) = -95.75% (Quantity falls by 95.75%)

New quantity demanded (Millions) = 230 x (1 - 0.9575) = 230 x 0.0425 = 9.775

Elasticity of supply = % Change in quantity supplied / % Change in price

0.6 = % Change in quantity supplied / 125%

% Change in quantity supplied = 125% x 0.6) = 75% (Quantity rises by 75%)

New quantity supplied (Millions) = 230 x (1 + 0.75) = 230 x 1.75 = 402.5

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Assume that bad weather shifts the supply curve for pineapples along the demand curve to the...
Assume that bad weather shifts the supply curve for pineapples along the demand curve to the left which increases the pineapple price to $2.53/pineapple. If the original equilibrium price of pineapples is $1.15/lb and the original equilibrium quantity is 1,455,300 pineapples, the elasticity of pineapple supply is 0.85 and the elasticity of demand is -0.15, what is the new equilibrium quantity demanded of pineapples? What is the new equilibrium quantity supplied?
8. Assume that bad weather shifts the supply curve for papayas along the demand curve to...
8. Assume that bad weather shifts the supply curve for papayas along the demand curve to the left which increases the papaya price to $1.06/papaya. If the original equilibrium price of papayas is 53cents/papaya and the original equilibrium quantity is 22,535,300 papayas, the elasticity of papaya supply is 1.15 and the elasticity of demand is -0.15, what is the new equilibrium quantity demanded of papayas? What is the new equilibrium quantity supplied? (HINT AGAIN: Be careful! Think about it.) ANSWER:...
5. If the equilibrium quantity of quinoa produced in Peru is 250 million lb and the...
5. If the equilibrium quantity of quinoa produced in Peru is 250 million lb and the equilibrium price of quinoa is $2.25/lb, by how much would the quantity supplied change if the price dropped by 60% given a quinoa supply elasticity of 0.25? ANSWER: 6. In the week before the Superbowl, guacamole cost $5.55/package and 10,255,500 packages were purchased. This week the price has gone down to $4.44/package. How many packages of guacamole will be supplied today if the price...
When the expected future price of a good falls, the supply curve shifts to the right...
When the expected future price of a good falls, the supply curve shifts to the right and the demand curve shifts to the left simultaneously. What happens to the equilibrium price after the shifts? What happens to the equilibrium quantity after the shifts? Is it always possible to determine the direction of change in both the equilibrium price and quantity or is more information necessary? Use supply and demand curves to graphically illustrate your answer 7.0.3
Suppose the market demand curve for a product is given by QD=100-5P and the market supply...
Suppose the market demand curve for a product is given by QD=100-5P and the market supply curve is given by QS=5P a. What are the equilibrium price and quantity? b. At the market equilibrium, what is the price elasticity of demand? Suppose government sets the price at $15 to benefit the producers. What is the quantity demanded? What is the quantity supplied? What is the amount of the surplus? Suppose market demand increases to Qd=200-5P. What is the new equilibrium...
Starting from a point of market equilibrium, suppose the demand curve shifts left and the supply...
Starting from a point of market equilibrium, suppose the demand curve shifts left and the supply curve shifts right. What will be true of the new equilibrium quantity relative to the starting point? Select all that apply: the equilibrium price will be lower the equilibrium price will be higher the equilibrium quantity will be lower we cannot be sure how equilibrium quantity will change 2)Suppose that stock market investors expect a booming economy and a higher overall price for stocks...
For each of the following assume that the supply curve shifts while the demand curve remains...
For each of the following assume that the supply curve shifts while the demand curve remains constant. What is the direction of the supply shift and relative elasticity of demand? 1.) Price falls significantly. Quantity hardly changes at all. Demand is ____ a.) perfectly elastic b.)highly inelastic c.)highly elastic 2.) Prices do not change. Quantity decreases significantly. Demand is _________ a.) highly elastic b.) perfectly elastic c.) highly inelastic Can anyone help?
When Demand increases, is that a shift of the curve or a movement along the curve?...
When Demand increases, is that a shift of the curve or a movement along the curve? Determine the direction of the shift or movement. When Supply decreases, is that a shift of the curve or a movement along the curve? Determine the direction of the shift or movement. When quantity demanded increases, is that a shift of the curve or a movement along the curve? Determine the direction of the shift or movement. When quantity supply decreases, is that a...
Which of the following statements is correct for a market with an upward-sloping supply curve and...
Which of the following statements is correct for a market with an upward-sloping supply curve and a downward-sloping demand curve? If the supply curve shifts left and demand remains constant, equilibrium quantity will rise. If the supply curve shifts right and the demand curve remains constant, equilibrium price will rise. If the demand curve shifts left and the supply curve shifts right, equilibrium price will rise. If the demand curve shifts right and the supply curve shifts left, equilibrium 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:    ...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT