Question 1

The demand for telephone wire can be expressed as:
Q = 6000 - 1,500P,
where Q represents units, in pounds per day, and P represents price, in dollars per pound. Determine the price elasticity of demand at  per pound.

Accepted Answer

The answer of The demand for telephone wire can be...

Question 2

The table below lists the demand curve for sleeves of tennis balls for each member of the Parker family. Use this information to determine the Parker's aggregate family demand for tennis balls. What is the price elasticity of demand for each member of the family at $2.00? What is the price elasticity of family aggregate demand at $2.00?

Accepted Answer

The answer of The table below lists the demand curve...

Question 3

General Motors estimates that U.S. demand for its newest product will be:  Export demand will be  The total market demand curve for this product will be a:

Accepted Answer

The answer of General Motors estimates that U.S. demand for...

Question 4

Fill in the blanks. Poorer countries have a ________ demand for U.S. wheat because they usually ________.

Accepted Answer

Poorer countries tend to have a higher elasticity of demand, meaning they are more likely to find substitutes for U.S. wheat. Therefore, the best choice is D, which states that poorer countries have a more elastic demand and are likely to find other substitutes.

Question 5

Recent research estimates that the short-run price elasticity of demand for gasoline in the U.S. is -0.3, and the long-run price elasticity of demand is -1.4. What happens if the government increases the federal gasoline tax?

Accepted Answer

The short-run price elasticity of demand for gasoline is inelastic (-0.3), meaning consumers will not significantly reduce their gasoline purchases when prices increase, leading to higher expenditures. In the long run, the demand is elastic (-1.4), meaning consumers will significantly reduce their gasoline purchases in response to price increases, leading to lower expenditures.

Question 6

Sally Henin has a price elasticity of demand for gasoline of -0.8. Her income elasticity for gasoline is 0.5. Sally's current income is $40,000 per year. Sally currently spends $800 per year on gasoline. The price of gasoline is currently $1.00 per gallon.
a. A contemplated excise tax on gasoline will cause the price of gasoline to rise to $1.40. What impact will the tax have on Sally's consumption of gasoline?
b. Since the purpose of the tax is only to discourage gasoline consumption, Congress is considering a $200 income tax rebate to lessen the burden of the gasoline tax. What impact will the rebates have on Sally's consumption of gasoline?
c. Assume that both the tax and rebate are implemented. Will Sally be worse off or better off?

Accepted Answer

The answer of Sally Henin has a price elasticity of...

Question 7

Figure 4.4.2
-Refer to Figure 4.4.2 above. The consumer surplus derived from pizza consumption is:

Accepted Answer

The consumer surplus is the area between the demand curve and the price level up to the quantity consumed. Based on the information provided, the consumer surplus is calculated to be $1500.

Question 8

Harding Enterprises has developed a new product called the Gillooly shillelagh. The market demand for this product is given as follows:
Q = 240 - 4P
a. If the shillelagh is priced at $40, what is the point price elasticity of demand? Is demand elastic or inelastic?
b. If the shillelagh price is increased slightly from $40, what will happen to the total expenditure on the Gillooly shillelagh?

Accepted Answer

The answer of Harding Enterprises has developed a new product...

Question 9

A local retailer has decided to carry a well-known brand of shampoo. The marketing department tells them that the quarterly demand by an average man is: Qd = 3 - 0.25P
And the quarterly demand by an average woman is:
Qd = 4 - 0.5P
The market consists of 10,000 men and 10,000 women. How may bottles of shampoo can they expect to sell if they charge $6 per bottle?

Accepted Answer

To find the total demand for both men and women at a price of $6, we need to plug in P=6 into both demand functions and then add them together:
Qd_men = 3 - 0.25(6) = 1.5
Qd_women = 4 - 0.5(6) = 1
Total demand = Qd_men(10,000) + Qd_women(10,000) = (1.5)(10,000) + (1)(10,000) = 25,000
Therefore, the retailer can expect to sell 25,000 bottles of shampoo if they charge $6 per bottle.

Question 10

A study of the per capita consumption of gasoline: in 10 countries demonstrates that:

Accepted Answer

The statement in option B is the correct one. This can be inferred from the sentence that says "higher gasoline prices do result in lower consumption of gasoline." The other options are either false or do not have sufficient evidence to support them.

Question 11

Figure 4.4.2
-Refer to Figure 4.4.2 above. The total weekly expenditure on pizza is:

Accepted Answer

The answer of  Figure 4.4.2
-Refer to Figure 4.4.2 above....

Question 12

The world demand for power transmission wire is made up of both domestic and foreign demands. Thus, the total demand is the sum of the two sub-demands, which are given as: Domestic demand: P_d = 5 - 0.005Q_d Foreign demand: P_f = 3 - 0.00075Q_f, where P_d and P_f are in dollars per pound, and Q_d and Q_f are in pounds per day. a. Determine the world demand for power transmission wire. b. Determine the prices at which domestic and foreign buyers would enter the market. c. Determine the domestic and foreign quantities at per pound. Check to see if the sum of Q_d and Q_f equals Q. d. Determine total rate of purchases at per pound.

Accepted Answer

The answer of The world demand for power transmission wire...

Question 13

The area below the demand curve and above the price line measures:

Accepted Answer

The area below the demand curve and above the price line represents the amount that consumers are willing to pay for a product but did not have to, due to the lower actual price. This is known as consumer surplus, which is the difference between what consumers are willing to pay and what they actually pay.

Question 14

Figure 4.4.1
-Refer to Figure 4.4.1 above. The value of consumer surplus when price is $4 equals:

Accepted Answer

Consumer surplus is the area between the demand curve and the price level, up to the quantity demanded. If the price is $4, the consumer surplus is calculated as the area of the triangle formed by the demand curve, the price line at $4, and the vertical axis. The correct calculation based on the figure would yield a consumer surplus of $21.

Question 15

Which of the following is an example of speculative demand?

Accepted Answer

Speculative demand refers to the demand for a good or service based on the expectation of future price changes. Option B fits this definition as it states that when the expected price of housing increases, the demand for housing increases. The other options do not involve speculative demand. Option A is an example of a negative relationship between price and quantity demanded. Option C is an example of a substitution effect between different types of housing. Option D is an example of complementary demand, where the demand for one good (housing) leads to an increase in demand for another good (house insurance).

Question 16

Joe's Pig Palace sells barbecue plates for $4.50 each, and serves an average of 525 customers per week. During a recent promotion, Joe cut his price to $3.50 and observed an increase in sales to 600 plates per week.
a. Calculate Joe's arc price elasticity of demand.
b. Joe is considering permanently lowering his price to $4.00 to increase revenue. How many plates should Joe expect to sell at the new price? Does the move make sense in the light of Joe's desire to increase revenue?

Accepted Answer

The answer of Joe's Pig Palace sells barbecue plates for...

Question 17

The difference between what a consumer is willing to pay for a unit of a good and what must be paid when actually buying it is called:

Accepted Answer

The difference between what a consumer is willing to pay for a unit of a good and what they actually have to pay is the definition of consumer surplus. Producer surplus refers to the difference between the cost of production and the price at which a seller is willing to sell the good. Cost benefit analysis is a method of evaluating the costs and benefits of a decision or project. Net utility refers to the total satisfaction or benefit an individual receives from consuming a good or service.

Question 18

Figure 4.4.3
-Refer to Figure 4.4.3 above. When the price of pizza is $20, total expenditure and consumer surplus are, respectively:

Accepted Answer

Total expenditure is calculated by multiplying the price by the quantity demanded at that price. Consumer surplus is the area above the price and below the demand curve, up to the quantity demanded. Without seeing Figure 4.4.3, the correct answer cannot be determined from the information given. However, based on the options provided and common outcomes in such scenarios, option C suggests a scenario where the total expenditure (price times quantity) is different from the consumer surplus, which is plausible if the demand curve is downward sloping and linear. This explanation is speculative and assumes a typical demand curve without seeing the actual figure.

Question 19

Suppose that the demand for artichokes (Q_a) is given as: Q_a = 120 - 4P a. What is the point price elasticity of demand if the price of artichokes is $10? b. Suppose that the price of artichokes increases to $12. What will happen to the number of artichokes sold and the total expenditure by consumers on artichokes? c. At what price if any is the demand for artichokes infinitely elastic?

Accepted Answer

The answer of Suppose that the demand for artichokes (Q_a)...

Question 20

Answer both parts of the following question.
a. The San Francisco Chronicle reported that the toll on the Golden Gate Bridge was raised from $2 to $3. Following the toll increase, traffic fell by 5 percent. Based on this information, calculate the point price elasticity of demand. Is demand elastic or inelastic? Explain.
b. Stephen Leonoudakis, chairman of the bridge's finance auditing committee, warned that the toll increase could cause toll revenues to decrease by $2.8 million per year. Is this statement consistent with economic theory? Explain.

Accepted Answer

The answer of Answer both parts of the following question.
a....

Quiz 4: Individual and Market Demand

The demand for telephone wire can be expressed as: Q = 6000 - 1,500P, where Q represents units, in pounds per day, and P represents price, in dollars per pound. Determine the price elasticity of demand at per pound.

General Motors estimates that U.S. demand for its newest product will be: Export demand will be The total market demand curve for this product will be a:

Fill in the blanks. Poorer countries have a demand for U.S. wheat because they usually .

Recent research estimates that the short-run price elasticity of demand for gasoline in the U.S. is -0.3, and the long-run price elasticity of demand is -1.4. What happens if the government increases the federal gasoline tax?

Figure 4.4.2 -Refer to Figure 4.4.2 above. The consumer surplus derived from pizza consumption is:

A study of the per capita consumption of gasoline: in 10 countries demonstrates that:

Figure 4.4.2 -Refer to Figure 4.4.2 above. The total weekly expenditure on pizza is:

The area below the demand curve and above the price line measures:

Figure 4.4.1 -Refer to Figure 4.4.1 above. The value of consumer surplus when price is $4 equals:

Which of the following is an example of speculative demand?

The difference between what a consumer is willing to pay for a unit of a good and what must be paid when actually buying it is called:

Figure 4.4.3 -Refer to Figure 4.4.3 above. When the price of pizza is $20, total expenditure and consumer surplus are, respectively: