Question

Why do you think it is difficult to estimate a demand curve in reality? Explain. Give...

Why do you think it is difficult to estimate a demand curve in reality? Explain.

Give three examples of goods or services that you believe may have high levels of consumer

surplus. Explain the logic for each.

Homework Answers

Answer #1

Demand curve analysis is based on the assumption that a consumer is rational and his preferences are transitive. He makes decision based on cost - benefit analysis. That means if he chooses A over B and B over C, then he will always choose A over C.

But the reality is far from this. There are external factors like fashion, taste, preference which keeps on changing and thus makes difficult to estimate a demand curve.

Consumer Surplus is the difference between maximum willingness to pay and price. It is high in case of public goods where a consumer pays a negligible price. Eg, Usage of Public Park, public transport, Water, etc

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
Give three examples of cultural imperialism. Why do you think your examples reflect cultural imperialism?Give three...
Give three examples of cultural imperialism. Why do you think your examples reflect cultural imperialism?Give three examples of cultural imperialism. Why do you think your examples reflect cultural imperialism?
Discuss why you might use a constant elasticity demand curve to calculate consumer surplus changes from...
Discuss why you might use a constant elasticity demand curve to calculate consumer surplus changes from a project. If you are given an elasticity estimate of -0.5 and a point such as Q =2, P=$9. What is the equation for the demand function?
Why do you think it is so difficult to find a cure for cancer?
Why do you think it is so difficult to find a cure for cancer?
What three aspects of professionalism do you think would be the most difficult to teach to...
What three aspects of professionalism do you think would be the most difficult to teach to healthcare students? Explain each of the three aspects separately that you are discussing.
1)Why do you think it is so difficult to find successful ERP implementation? 2. How do...
1)Why do you think it is so difficult to find successful ERP implementation? 2. How do you think cloud computing will help ERP implementations find success? 3. What advice would you give a company deciding to implement an ERP system? 4. How can integrating SCM, CRM, and ERP help improve business operations at your school?
In the context of torque, why do you think it would be difficult to propel an...
In the context of torque, why do you think it would be difficult to propel an astronaut floating in space outside a space station directly in a straight line?
There are many definitions of public relations. which one do you think best reflects reality? Why?...
There are many definitions of public relations. which one do you think best reflects reality? Why? answer must be 20 lines long.
1. Do you think that taxes should be increased? Explain why or why not. If yes,...
1. Do you think that taxes should be increased? Explain why or why not. If yes, then whose taxes be raised? Which income levels? To what levels?
Why do you think it is difficult for investors to assess the financial condition of a...
Why do you think it is difficult for investors to assess the financial condition of a financial institution that has purchased a large amount of mortgage-backed securities? Provide an example.
Why do you think it is difficult for investors to assess the financial condition of a...
Why do you think it is difficult for investors to assess the financial condition of a financial institution that has purchased a large amount of mortgage-backed securities? Provide an example.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT