Explain the concept of elasticity and the impact on the outcome of the relative elasticities of...
Homework Answers
Elasticity refers to the responsiveness of quantity of a good due to change in its price.
Elasticity of demand refers to the degree by which quantity demanded of a good changes as price changes.
Similarly, elasticity of supply refers to the degree by which quantity supplied of a good changes as price changes.
Elasticity is of 3 types: elastic , unit elastic and inelastic
Elastic: When quantity changes by more than change in price
Unit elastic: When quantity changes equal to proportionate change in price
Inelastic: When quantity changes by less than proportionate change in price
When demand shifts, the effect on quantity demanded is more when demand is elastic in nature
When supply shifts, effect on quantity supplied is more when supply is elastic in nature.
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Explain the concept of elasticity and the impact on the outcome of
the relative elasticities of...
Explain the elasticities of demand for the following products based on the determinants of elasticity we...
Explain the elasticities of demand for the following products based on the determinants of elasticity we discussed in class last 2 weeks. Housing 0.12 Cable TV (Basic Rural) 0.69 Cable TV ( Basic Urban) 1.51 Restaurant Meals. 2,27 Kitchen & Household appliances 0.63 F a tax imposed on the
Describe the price elasticity of supply or demand of laptops at Walmart. Explain how two non...
Describe the price elasticity of supply or demand of laptops at Walmart. Explain how two non price factors that impact the demand of the laptops. Explain how two non price factors impact the supply of laptops. Define the industry and the market equilibrium associated with laptops. Predict the effect of changes in supply and demand on the market equilibrium.
4. Consider two markets, A and B, that have different price elasticities of demand and supply....
4. Consider two markets, A and B, that have different price elasticities of demand and supply. Market A has price elastic demand and supply functions. Market B has very price inelastic demand and supply functions. a. Graph demand and supply curves for these two markets and describe how the curves differ across the 2 markets. b. Suppose both markets are subject to shocks that shift demand or supply from week to week. Further suppose that the shocks are similar (in...
2. For each pair of price elasticities, which elasticity would you expect to be larger (relatively...
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The own-price elasticity is related to changes in quantity demanded. Cross-price elasticities are related to changes...
The own-price elasticity is related to changes in quantity demanded. Cross-price elasticities are related to changes in demand. Explain this statement
how might the concept of cross-price elasticity of demand be useful when attempting to identify the...
how might the concept of cross-price elasticity of demand be useful when attempting to identify the impact of an increase in the price of petrol on the demand for cars , or the impact of reduction in the price of butter on the demand for margarine
The Laffer curve is said to be based on O elasticity-sided economics. supply-side economics. indifference-curve economics....
The Laffer curve is said to be based on O elasticity-sided economics. supply-side economics. indifference-curve economics. O demand-side economics. Which of the following is consistent with the idea underlying the Laffer curve? Tax cuts encourage people to work more, which increases the labor gupply. Whether tax cuts impact supply or tax cuts impact demand is dependent on where the economy is initially at on the Laffer curve. Because elasticities determine the size of the deadweight loss, elasticities can be used...
Explain the relationship between the price elasticity of demand and total revenue. What are the impacts...
Explain the relationship between the price elasticity of demand and total revenue. What are the impacts of various forms of elasticities (elastic, inelastic, unit elastic, etc.) on business decisions and strategies to maximize profit? Explain your responses using empirical examples, formulas, and graphs. Is the price elasticity of demand or supply more elastic over a shorter or a longer period of time? Why? Give examples.
3. Use graphs to demonstrate the income elasticity of: Steaks, Hamburgers, and Ramen noodles. What assumption...
3. Use graphs to demonstrate the income elasticity of: Steaks, Hamburgers, and Ramen noodles. What assumption did you make about each product in regard to its income elasticity? Use the appropriate economic terms in describing your assumptions. What is the economic significance of this for US agriculture? Explain. (30 points) 4. Consider a competitive market for pork with the quantity demanded (per year) at various prices are given as follows: Price (dollars/kg) Demand (million kg) 60 22 80 20 100...
1. Elasticities Consider the following supply and demand functions AD = 16-4p Is2 +5p a) Plot the supply and demand...
1. Elasticities Consider the following supply and demand functions AD = 16-4p Is2 +5p a) Plot the supply and demand functions. b) What are the equilibrium price and quantity? c) At the equilibrium price and quantity, what is the price elasticity of demand? d) Interpret the price elasticity of demand. How much will quantity change if the price increases by 1%? e) Suppose I were to calculate an income elasticity of 0.1. What does this imply about the good in...
4. Consider two markets, A and B, that have different price elasticities of demand and supply. Market A has price elastic demand and supply functions. Market B has very price inelastic demand and supply functions. a. Graph demand and supply curves for these two markets and describe how the curves differ across the 2 markets. b. Suppose both markets are subject to shocks that shift demand or supply from week to week. Further suppose that the shocks are similar (in...
The Laffer curve is said to be based on O elasticity-sided economics. supply-side economics. indifference-curve economics. O demand-side economics. Which of the following is consistent with the idea underlying the Laffer curve? Tax cuts encourage people to work more, which increases the labor gupply. Whether tax cuts impact supply or tax cuts impact demand is dependent on where the economy is initially at on the Laffer curve. Because elasticities determine the size of the deadweight loss, elasticities can be used...
1. Elasticities Consider the following supply and demand functions AD = 16-4p Is2 +5p a) Plot the supply and demand functions. b) What are the equilibrium price and quantity? c) At the equilibrium price and quantity, what is the price elasticity of demand? d) Interpret the price elasticity of demand. How much will quantity change if the price increases by 1%? e) Suppose I were to calculate an income elasticity of 0.1. What does this imply about the good in...
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