Homework Answers
Ans.1-
A) Dp will be negative. This is due to law of demand which states that a higher price leads to lower demand for a good ,ceteris paribus.
Dr will be negative. This is because the higher the interest rate the more expensive it is for people to borrow money in order to buy cars and therefore there will be lower demand for luxury cars.
B) dP/dr will be negative. This is because as mentioned earlier a higher r leads to a lower demand for luxury cars and therefore demand curve shifts to the left. The outcome is lower price and lower equilibrium quantity.
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1. Suppose the demand D(P,r) for a luxury car depends on its price P and the...
5. Consider a demand and supply problem where supply of a single good is (s(P) where...
5. Consider a demand and supply problem where supply of a single good is (s(P) where P is the price of the good, and the demand of the good is Qo(P,Y) where Y is the income of a consumer. The excess demand function is defined as ED(P,Y) = Q(P,Y) – Qs(P). Suppose all (partial) derivatives of demand, supply and ED are continuous and differentiable, and < 0 (demand curve is negatively sloped), D > 0 (i.e. this good is a...
Suppose that the money demand function is (M/P)d = 800 - 50r, where r is interest...
Suppose that the money demand function is (M/P)d = 800 - 50r, where r is interest rate in percent. The money supply M is 2,000 and the price level P is fixed at 5. a. Graph the supply and demand for real money balances. b. What is equilibrium interest rate? c. What happens to the equilibrium interest rate if the supply of money is reduced from 2000 to 15000? d. If the central bank wants the interest rate to be...
Suppose that the money demand function is (M/ P)^d = 1000-100r where r is the interest...
Suppose that the money demand function is (M/ P)^d = 1000-100r where r is the interest rate in percent. The money supply M is 1000 and the price level P is 2.(a) Graph the supply and demand for real money balances.(b) What is the equilibrium interest rate?(c) Assume the price level is xed. What happens to the equilibrium interest rate if the supply of money is raised from 1000 to 1200?(d) If the Fed wishes to raise the interest rate...
Problem 1. Suppose the market demand is given by D(P) = 10 – 2p and the...
Problem 1. Suppose the market demand is given by D(P) = 10 – 2p and the market supply is given by S(p) = 3p - 5. 1. Draw the supply and demand curves. Determine the equilibrium price p* and the equilibrium output x*. Determine CS, PS, and TS. 2. Explain why TS is maximized at the equilibrium price p*. 3. Suppose government imposed a $0.5 quantity tax. Determine the equilibrium price and the equilibrium output after the tax. Also, determine...
2. The demand for money is: Mº = PYL (1), where P is the price level,...
2. The demand for money is: Mº = PYL (1), where P is the price level, Y is the real GDP and L () is an inverse function of the rate of interest (i.e. when i increases, L (1) decreases, and vice versa). Money supply is: M$ = mH, where H is the high-powered money issued by the central bank and m is the money multiplier. (a) Draw the money demand and supply curves on a graph with money demand...
The demand for product X depends on the price of product X as well as the...
The demand for product X depends on the price of product X as well as the average household income (Y) according to the following relationship Qdx = 800 - 35 P + 0.001Y The supply of product X is positively related to own price of product X and negatively dependent upon W, the price of some input. This relationship is expressed as: Qsx = 130 + 30 P - 2 W Given that Y = 50,000 and W = 10,...
The demand for product X depends on the price of product X as well as the...
The demand for product X depends on the price of product X as well as the average household income (Y) according to the following relationship Qdx = 600 - 25 P + 0.001Y The supply of product X is positively related to own price of product X and negatively dependent upon W, the price of some input. This relationship is expressed as: Qsx = 130 + 20 P - 3 W Given that Y = 25,000 and W = 7,...
Microeconomics...2. For the car industry of nation A, the market demand is QD(P, I)2000 x...
Microeconomics...2. For the car industry of nation \(\mathrm{A}\), the market demand is$$ Q_{D}(P, I)=2000 \times P^{-2} I^{0.5} $$where \(I\) is income.a. Compute the price elasticity \(e_{D, P}\) and income elasticity \(e_{D, I}\) of the car demandb. Suppose there is a \(10 \%\) increase of income \(I\). We do not know the supply function \(Q_{S}(P)\), but knows that the supply elasticity is \(e_{S, P}=3\) from empirical data. Predict how much the equilibrium price will increase (in percentage).
please show work 1. Consider the national market for Tesla Model S all-electric luxury car with...
please show work
1. Consider the national market for Tesla Model S all-electric luxury car with the inverse demand given by P=120-0.75*Qd and inverse supply given by P=15+0.25Qs. (Note: the price is in thousands of US$ and quantity is in thousands of cars). a. Calculate the equilibrium price and quantity and draw a graph to represent them. (Label clearly everything on the graph to obtain maximum points) b. Calculate the Total Surplus at the equilibrium point and provide a succinct...
(2 points) Suppose D(g)-1932 and S(12q+1 are the demand and supply functions for a particular com...
Thank you so much!
(2 points) Suppose D(g)-1932 and S(12q+1 are the demand and supply functions for a particular commodity. That is, q thousand units of the commodity will be demanded (sold) at a price of p D() dollars per unit, while q thousand units will be supplied by producers when the price is p S(q) dollars per unit. a. Find the equilibrium price Po where supply equals demand Answer: Po dollars per unit b. Compute the consumers' surplus at...
5. Consider a demand and supply problem where supply of a single good is (s(P) where P is the price of the good, and the demand of the good is Qo(P,Y) where Y is the income of a consumer. The excess demand function is defined as ED(P,Y) = Q(P,Y) – Qs(P). Suppose all (partial) derivatives of demand, supply and ED are continuous and differentiable, and < 0 (demand curve is negatively sloped), D > 0 (i.e. this good is a...
Problem 1. Suppose the market demand is given by D(P) = 10 – 2p and the market supply is given by S(p) = 3p - 5. 1. Draw the supply and demand curves. Determine the equilibrium price p* and the equilibrium output x*. Determine CS, PS, and TS. 2. Explain why TS is maximized at the equilibrium price p*. 3. Suppose government imposed a $0.5 quantity tax. Determine the equilibrium price and the equilibrium output after the tax. Also, determine...
2. The demand for money is: Mº = PYL (1), where P is the price level, Y is the real GDP and L () is an inverse function of the rate of interest (i.e. when i increases, L (1) decreases, and vice versa). Money supply is: M$ = mH, where H is the high-powered money issued by the central bank and m is the money multiplier. (a) Draw the money demand and supply curves on a graph with money demand...
Microeconomics...2. For the car industry of nation \(\mathrm{A}\), the market demand is$$ Q_{D}(P, I)=2000 \times P^{-2} I^{0.5} $$where \(I\) is income.a. Compute the price elasticity \(e_{D, P}\) and income elasticity \(e_{D, I}\) of the car demandb. Suppose there is a \(10 \%\) increase of income \(I\). We do not know the supply function \(Q_{S}(P)\), but knows that the supply elasticity is \(e_{S, P}=3\) from empirical data. Predict how much the equilibrium price will increase (in percentage).
please show work
1. Consider the national market for Tesla Model S all-electric luxury car with the inverse demand given by P=120-0.75*Qd and inverse supply given by P=15+0.25Qs. (Note: the price is in thousands of US$ and quantity is in thousands of cars). a. Calculate the equilibrium price and quantity and draw a graph to represent them. (Label clearly everything on the graph to obtain maximum points) b. Calculate the Total Surplus at the equilibrium point and provide a succinct...
Thank you so much!
(2 points) Suppose D(g)-1932 and S(12q+1 are the demand and supply functions for a particular commodity. That is, q thousand units of the commodity will be demanded (sold) at a price of p D() dollars per unit, while q thousand units will be supplied by producers when the price is p S(q) dollars per unit. a. Find the equilibrium price Po where supply equals demand Answer: Po dollars per unit b. Compute the consumers' surplus at...
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