Show what happens to the supply or demand curve in each of the following situations (only ONE curve will shift). Make sure to label all curves and markets, and show what happens to equilibrium price and quantity. Given the market for SPAM, what would happen if there is an economic boom and incomes of most consumers increased.
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Show what happens to the supply or demand curve in each of the following situations (only ONE curve will shift). Make sure to label all curves and markets, and show what happens to
Given the market for SPAM, what would happen if there is an economic boom and incomes of most consumers increased.
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- As a producer, how would you use the information about elasticity to maximize your revenue? Explain.Suppose in a small town called Utopia live 200 children and 300 adults. The only entertainment in the town is a theatre. The theatre has a fixed cost of 2000 dollars for preparing each play. However, once the play is ready, then selling an additional ticket has no cost at all. Demand for adult citizens and children are given in the following table What price would this theatre company charge for an adult ticket and for a child’s ticket? How much will it make?1. In Town A there is only one newspaper, Daily Outrage. The demand for the paper depends on the price and the amount of scandal reported. The demand function is Q = 15SP-3 where Q is the number of issues sold per day, S is the number of column inches of scandal reported in the paper, and P is the price. Scandals are not a scarce commodity in town A, but it takes resources to write, edit, and print stories of scandal. The cost of reporting S units of scandal is £10S and is independent of the number of papers sold. In addition, the cost to print and deliver the paper is £0.10 per copy and is independent of the amount of scandal reported in the paper. (a) Calculate the price elasticity of demand. Explain whether the price elasticity depends on the amount of scandal reported and whether the price elasticity is constant over all prices. Comment on the price sensitivity of the readers of the Daily Outrage. (b) Calculate the profit maximising price using the formula that writes marginal…
- THE DEMAND FUNTION SHOWSWhich of the following explains why a seller might charge a high price when a new video game console is first released and then lower the price as time goes by? Select one: a. The buyers want to buy the new video game console only if the price is high because a high price signals good quality. b. The seller wants to test the market to see how consumers react to the product. c. The seller has to sell the newly released video game console at the government-mandated price. d. The seller can charge a high price to consumers who want to be the first ones to own a newly released product.What would happen if the government started regulating product prices, and how would that affect consumer behaviour?
- Consider the market for outdoor porch swings. The following graph shows the supply and the demand curve of the good. Assume that the price of home and garden goods is regulated, and the price of outdoor swings cannot exceed Preg, also shown on the graph below. The letters A to K denote certain areas on the graph. Is there a surplus or a shortage at the regulated price? What area represents the CS at the regulated price? What about PS? What about TS? Given the regulation, is there a DWL? If yes, what area represents this DWL?A city Has built a bridge over a river and it decides to charge a toll to everyone who crosses. For one year, the city charges a variety of different tools told and records information on how many drivers across the bridge. The city thus gathers information about elasticity of demand. If the city wishes to raise as much revenue as possible from the tolls, where will the city decide to charge a toll: in the inelastic portion of the demand curve, the elastic portion of the demand curve, or the unit elastic portion? Explain.In the last six months, the price of fuel for cars has increased very substantially in many countries. Explain why we might expect demand to be more price elastic in the long-run than in the short-run.
- Suppose that a new restaurant entry increased consumer elasticity of demand for the sushi appetizer from 2 to 3. The price you charge initially is $10. By how much will you have to adjust the price? Will you still be able to make profit?The government needs to raise revenue to subsidize the vegetable industry and wants to do so by taxing the fruit industry. Four fruit markets are summarized below. Fruit Markets Apple Banana Cherry Durian Demand P= 163-0.9Q P = 163-2.7Q P=163-3.1Q P = 163-2.7Q Supply P=6+0.8Q P=6+0.8Q P=6+4.2Q P=6+4.20 If the government imposes a $9.9 per fruit tax on one of these markets, what's the most it could earn? a. $211.06 b. $251.08 c. $856.64 d. $416.08Is there an economic case of banning short selling in the United States?