Question

Can someone help me ASAP! a. An art museum raises its admission price, and ends up with a decrease in its total revenue. How you explain this situation to the museum director? b. Suppose Billy drinks two cups of coffee a day no matter hat the price. What does this mean in terms of supply and demand equilibrium? c. What are the main determinants of equilibrium of demand and supply? Which is likely to have more of an impact on supply and therefore market equilibrium: the demand for orange juice or the demand for a particular brand of orange juice?

Answer 1

The demand for museum art is elastic as admission price increases total revenue of museum decrease.small change in admission price leads to high change in demand QUANTITY. So because of their art's demand was elastic,so Increasing the admission price leads to fall in very high decrease in demand and thus total revenue.

No matter what hat the price ,billy drinks two cups of coffee,shows perfect inelastic demand of coffee for billy.the perfect inelastic demand shows no effect of price change on demand QUANTITY (fixed QUANTITY demanded).the demand curve would be vertical straight line.

Price itself is a deteminants of demand ,apart from that, CONSUMER's income,tastes and preferences, substitute and complement good's price,, expectations of price change, seasonal change ,are determinants of demand.

Supply determinants are,price of good, substitute and good price, technology change,input prices change,taxes and subsidy ,

The demand for orange have more impact on supply and market equilibrium.market supply of orange include all brands of juice,so if demand of orange increases,so brand of orange juice producer Increase supply ,so it have larger effect on supply and therefore on market EQUILIBRIUM.

On other hand increase in demand of a particular brand of orange juice will give incentive to just that brand of juice producer,only one producer Increase its supply ,so effect on market supply will be lower and therefore small effect on market equilibrium.