Question 1

Consider the markets for prescription blood pressure medications and Kraft Macaroni and Cheese. Which of these goods do you think has the more elastic demand? Which is more inelastic? Explain your reasoning.

Accepted Answer

The answer of Consider the markets for prescription blood pressure...

Question 2

Summarize the factors that cause goods to have a more inelastic supply.

Accepted Answer

The answer of Summarize the factors that cause goods to...

Question 3

Over the past 50 years, technological innovations have significantly decreased the costs associated with farming and the production of food. At the same time, however, the profits associated with farming have also decreased significantly. Using the concept of elasticity of demand, explain why farmers' profits have been falling as costs of production have also been falling.

Accepted Answer

The answer of Over the past 50 years, technological innovations...

Question 4

For each of the following goods would you expect the supply to be elastic or inelastic? Provide explanation for each of your rationales.
a. oil
b. toothpicks
c. Picasso paintings.

Accepted Answer

The answer of For each of the following goods would...

Question 5

Explain the change in tactics Nobel Prize-winning economist Gary Becker suggests concerning the method of fighting the war on drugs. What is so attractive about this alternative?

Accepted Answer

The answer of Explain the change in tactics Nobel Prize-winning...

Question 6

Discuss the effectiveness of the slave redemption programs in Sudan when it is assumed that the elasticity of the supply of slaves is perfectly inelastic. Use a supply and demand diagram to help illustrate your response.

Accepted Answer

The answer of Discuss the effectiveness of the slave redemption...

Question 7

Table: Price Elasticities

Refer to the table. Use the information provided to predict the following:
a. The percent change in price (P) when there is a 2 percent rise in the quantity demanded for Good X.
b. The percent change in price (P) when there is a 5 percent fall in the quantity demanded for Good Y.
c. The percent change in price (P) when there is a 5 percent fall in the quantity supplied of Good X.

Accepted Answer

The answer of Table: Price Elasticities

Refer to the table. Use...

Question 8

Figure: iPod Consumers  
A local electronics store sells iPods for $100 per unit. The manager who took a lesson from his economics course in college decides to offer a 20 percent discount to students who can present their current student ID at purchase. Given the demand curves for regular and student customers, answer the following questions.
a. What will be the total revenue for both groups of customers if the store offers the discount?
b. For which group of customers is the demand more elastic?
c. What is the elasticity of demand between the prices of $100 and $80 in the regular market?
d. What is the elasticity of demand between the prices of $100 and $80 in the student market?
e. If the manager increases the regular price of iPods to $120 and lowers the discount price to $70, how much could the store increase total revenues?

Accepted Answer

The answer of Figure: iPod Consumers  
A local electronics...

Question 9

Consider a market that is described by the equations Q_d = 10 - 0.5P, and Q_s = -2 + 1.5P. What is the equilibrium price? What is the equilibrium quantity? If the demand curve shifts and the new demand equation is 8 - 0.5P, what are the new equilibrium price and the new equilibrium quantity? Calculate the price elasticity of supply. Is the supply curve between price and price 2 inelastic or elastic?

Accepted Answer

The answer of Consider a market that is described by...

Question 10

In an effort to decrease carbon emissions in California, the state government decided to implement a "car buyback" program in order to decrease the number of cars on the streets. The California government would offer a $2,000 tax rebate for each car turned in. The cars would then be demolished and the steel recycled. Would a program like this succeed at significantly decreasing the number of cars driven in California? Explain.

Accepted Answer

The answer of In an effort to decrease carbon emissions...

Question 11

Table: Elasticities of Good X

Refer to the table. From the information in the table, what can you say about good X? In particular, is the demand for Good X rather elastic or inelastic? What does this imply about the number of substitutes that exist for Good X? Does Good Y appear to be a substitute for Good X? Does Good X appear to be a normal or inferior good? Finally, is the elasticity of supply for Good X relatively elastic or inelastic?

Accepted Answer

The answer of Table: Elasticities of Good X

Refer to the...

Quiz 5: Elasticity and Its Applications

Consider the markets for prescription blood pressure medications and Kraft Macaroni and Cheese. Which of these goods do you think has the more elastic demand? Which is more inelastic? Explain your reasoning.

Summarize the factors that cause goods to have a more inelastic supply.

For each of the following goods would you expect the supply to be elastic or inelastic? Provide explanation for each of your rationales. a. oil b. toothpicks c. Picasso paintings.

Explain the change in tactics Nobel Prize-winning economist Gary Becker suggests concerning the method of fighting the war on drugs. What is so attractive about this alternative?

Discuss the effectiveness of the slave redemption programs in Sudan when it is assumed that the elasticity of the supply of slaves is perfectly inelastic. Use a supply and demand diagram to help illustrate your response.