HW 3 Study Guide

The cross‑price elasticity of bows and violins is −0.3 , where the percentage change in quantity is for bows and the percentage change in price is measured for violins. Calculate the percentage that the quantity demanded of bows will change if the price of violins decreases by 12% . Enter the response to one decimal place and enter a negative number if the quantity demanded decreases.

-3.0*-12=3.6

The cross‑price elasticity of coffee and tea is 0.60.6 , where the percentage change in quantity is for coffee and the percentage change in price is measured for tea. If the price of tea increases by 6.0%6.0%, what will the percentage change in the quantity demanded of coffee (%ΔQD) be? Enter the response to one decimal place and enter a negative number if the quantity demanded decreases.

0.6*6.0=3.6

At the beginning of this year, daily consumption of gasoline in the US amounted to 344 million gallons. It is estimated that for every 10%10% increase in the price of gasoline, quantity demanded falls by 2.5%. By the end of this year, the price of gasoline is expected to increase by 40 cents from $3.103.10 per gallon. Based on this information, what is the expected quantity demanded (QD) for gasoline at the end of this year? Please specify your answer to one decimal place.

2.5/10 = 0.25 0.40/3.30 = 12.1 0.25*12.1=3.0 344 * ((100-3.0)/100) = 332.9

Ivan, a Russian fisherman, needs a permit to fish and sell a certain type of fish, the yellow perch. Select the term that best fits the scenario.

license

If a 25% price increase for Product A causes a 10% decrease in its quantity demanded, but no change in the quantity demanded for Product B, what is the cross-price elasticity of these goods? Round your answer to one decimal place.

Cross price elasticity = % Change in quantity demanded of product B / % Change in price of product A. = 0 / 0.25 = 0 There is no relationship between product A and product B i.e., neither product A and product B are complements nor they are substitutes.

The table shows information on the conditions of demand for ordinary gummy bears and their sugar-free version. Price ($ per kg)Sugar-free Gummy Bears Demanded (thousands of kg)Regular Gummy Bears Demanded (thousands of kg) $2.20 181.00 485.00 $2.60 175.00 379.00 $3 157 273.00 $3.40 137.00 155.00 As the price of gummy bears rises from $2.60 to $3, what are the price elasticities of demand of sugar-free gummy bears and of ordinary gummy bears? Use the midpoint method and specify answers to one decimal place.

Elasticity of demand=(change in quantity/average quantity)/(change in price/average price)Change in quantity=161-179=-18average quantity=(179+161)/2=170change in price=3-2.6=0.4average price=(2.6+3)/2=2.8Elasticity of demand=(-18/170)/(0.4/2.8)=-0.741176471=-0.74 Elasticity of demand=(change in quantity/average quantity)/(change in price/average price)Change in quantity=277-383=-106average quantity=(277+383)/2=330change in price=3-2.6=0.4average price=(2.6+3)/2=Elasticity of demand=(-106/330)/(0.4/2.8)=-2.24848485=-2.25

In the long run ,the shortages of available housing resulting from rent controls are _______ pronounced than as they are in the short run. One explanation for this is that in the long run ,firms can makes changes to the amount of housing they provide _______ easily than they can in the short run. Because of differences in firms ability to make changes in quantity supplied ,the long run supply curve for housing is modeled as a line that is _______ steep than the short run supply curve because the long run supply curve is more elastic i.e more flatter. Therefore, supply is _______ elastic in the short run than in the long run.In the short run ,the supply curve is inelastic and therefore more steeper than in the long run when supply is more elastic and therefore more flatter.

In the long run ,the shortages of available housing resulting from rent controls are more pronounced than as they are in the short run. One explanation for this is that in the long run ,firms can makes changes to the amount of housing they provide more easily than they can in the short run. Because of differences in firms ability to make changes in quantity supplied ,the long run supply curve for housing is modeled as a line that is less steep than the short run supply curve because the long run supply curve is more elastic i.e more flatter. Therefore, supply is less elastic in the short run than in the long run.In the short run ,the supply curve is inelastic and therefore more steeper than in the long run when supply is more elastic and therefore more flatter.

Garret is an undergraduate looking for a job to pay for college. As Garret seeks employment, he is glad to know that he will be paid at least $7.25 per hour.

Price Floor

Which example best represents perfectly inelastic supply? original paintings made by Leonardo Da Vinci a good with no substitutes in consumption a restaurant willing to cater any number of dishes if the price is greater than $10 a plate the market for collectible trading cards

Which example best represents perfectly inelastic supply?

The table contains the supply and demand schedule for Bluefin tuna. Suppose all countries agree to limit tuna fishing to a total of 15,000 tons per year through a strictly enforced licensing program for fishermen.Price per Pound Quantity Demanded (tons) Quantity Supplied(tons)$11.80 12,000 27,000$11.35 15,000 24,000$10.90 18,000 21,000$10.45 21,000 18,000$10.00 24,000 15,000$9.55 27,000 12,000At the new fishing quota, what is the quota rent per pound of Bluefin tuna?Suppose the average fisherman can catch 200,000 pounds of Bluefin tuna every year ( 100 tons). What is the value of a Bluefin tuna fishing license?

a. $1.35 (11.35-10.00) b. $270000 (1.35*200,000)

In the long run, the shortages of available housing resulting from rent controls are ___________ pronounced than (as) they are in the short run. One explanation for this is that in the long run, firms can makes changes to the amount of housing they provide __________ easily than (as) they can in the short run. Because of differences in firms' ability to make changes to quantity supplied, the long-run supply curve for housing is modeled as a line that is ____________ steep than (as) the short-run supply curve. Therefore, supply is _____________________ elastic in the short run than (as) in the long run.

more more more less

Farmer Nick raises goats. When he can sell his goats for $200/goat he will sell any or all of his goats. He never asks for more than $200/goat and he never sells his goats for less than $200/goat.

perfectly elastic supply.

The U.S. government limits the amount of sugar that can be purchased from foreign sugar producers. Select the term that best fits the scenario.

quota