Suppose that good 1 is normal and good 2 is inferior. Prove that the total effect on demand for good 1 of a marginal increase in the price of good 2 cannot exceed the total effect on demand for good 2 of a marginal increase in the price of good 1. That is, prove that əri əx2 дрг - дрі where, for each i = 1,2, z; denotes the Marshallian demand for good i and p; denotes the price of good i. Solution: By the Slutsky equation,
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please only do: if you can teach explain steps of how to solve each part
for ifererior SE>IE?
what happens to the SE please show each part of formula, when the other pice is normal how will it affect inferior
is is inferior cheaper? why SE > 0 is IE <0
Step by step
Solved in 3 steps with 4 images
- The market for cellular phones has seen a combination of improving telecommunication technology and rising consumer incomes. Suppose you are told that the price of cellular phones decreased over the past five years. The decreasing prices of cellular phones, a normal good, implies that the magnitude of: A. he rightward shift of the demand curve is greater than that of the rightward shift of the supply curve B. The leftward shift of the demand curve is greater than that of the rightward shift of the supply curve C. The rightward shift of the demand curve is less than that of the rightward shift of the supply curve D. The rightward shift of the demand curve is less than that of the leftward shift of the supply curveanswer please the last 2 sub questions The estimated demand for Canadian Processed Pork is given byQD = 171 − 20p + 20pB + 3pC + 2Ywhere QD is the quantity of pork demanded (millions of kg), p is the dollarprice per kg, pB is the price of beef per kg, pC is the price of chicken perkg, and Y is average consumer income in thousands of dollars. The supplyfor this market is given byQS = 178 + 40p − 60pB(a) According to the equations, what is the effect of an increase of pCon the market for pork? Specifically, which curve will shift, in whatdirection does the curve shift, and how will the equilibrium priceand quantity change (increase/decrease). On a corresponding graphof the supply and demand, draw the shifting curve and change inequilibrium. Note that no specific numbers are required here. Justthe direction of change.(b) Use the equations to solve for the equilibrium price of pork and quantity of pork as functions of the exogenous variables pB, pC , and Y .These will be linear…There are two consumers in the market for one good (with price P), A and B. Consumer A's inverse demand is given by P = -2QA+5 and consumer B's inverse demand is given by P = -QB+10. At a price of 5, the total quantity demanded is ________ a) 0 b) 0.5 c) 1 d) 1.5 e) 2 f) 2.5 g) 5
- Assume a demand equation for good 'x': where Q = 90.1pPy + 0.01pz + 0.0005Y; p= own price of the good Q = quantity demanded Py = price of a related good = $3 P₂ = price of a different related good = $200 Y = consumer income = $4,000/mo. The quantity demanded as a function of the price can be written: Q = 10-0.1p If the price of this good 'x' is equal to $46 per unit, what would be the quantity demanded? units. (enter your response rounded to one decimal place)The demand side of the market for Sprite is comprised of 2 people. These people are William and Owen. P represents the price of 1 gallon of Sprite, and Qd represents the quantity demanded of Sprite in gallons. William's demand for Sprite is modeled by the equation QdW = 10 - 2P Owen's inverse demand for Sprite is modeled by the equation P = 10 - 2QdO (Part I) With this information, draw the market demand graph. Please label the graph for slope values, intercepts, kinks, etc. (Part II) The market supply is modeled by P = Qs. Let's say that the government places a subsidy of $8 (s = 8). As a result, what is the market equilibrium with this intervention of the government (Q**, PD**, and PS**)? (Part III) Please draw the market demand and market supply on a new graph and indicate/label the market equilibrium with the government intervention through a subsidy. Label the graph for slopes, subsidy, equilibrium points, etc.Suppose that the demand curves for goods A, B, and C have the following functional forms:, where Q denotes quantity demanded and P denotes price: QA = 120 - 3.5 PA + 6PB QB = 100 - 2PB + 3PC QC = 1500 - 0.5PC - 2PA. Based on these demand curves, which of the following pairs of goods are known to be substitutes? Based on these demand curves, which of the following pairs of goods are known to be Complements?
- Let's say that the demand side of the market for Blue Soda is comprised of 3 leading agents/individuals: Anthony, Brad, and Claire. Let P be the price of 1 liter of Blue Soda, and Qd be the quantity demanded of Blue Soda in liters. Here are the key points to the problem: - Anthony buys only one liter of Blue Soda if the price of it falls below his choke price of $10. - Brad's demand for Blue Soda is defined by QdB = 5 - P/2 - Claire buys 2 liters if the price is below $5, 1 liter if the price is between $5 and $10, and nothing if the price is above $10. Using this information, please sketch the individual demands and the market demand by aggregating the three agents/individuals. Label the graph clearly. Please make sure to sketch the individual demands first and then sketch the market demand.Name a normal good, an inferior good, a set of substitute goods, a set of complements that are used in your household daily. For the normal good, make a (Hypothetical) linear demand schedule with 7 different price points and corresponding quantity demanded by your own household. For the same normal good, make another (Hypothetical) linear demand schedule with 7 different price points and corresponding quantity demanded by your neighbor. Assuming that you and your neighbor are the only two households in the market, make a market demand schedule for the same normal good. Draw and interpret a graph to show the market demand and impact of changes in quantity demanded if the price of the same normal good decreases. For the inferior good, draw and interpret a graph showing the demand curve and a shift in the curve if your income increases. For anyone good from the set of substitutes, draw and interpret a graph showing the demand curve and a shift in the curve if the price of the substitute…5 Suppose the quantity of good X demanded by individual 1 is given byX1 = 10−2PX +0.01I1 +0.4PYand the quantity of X demanded by individual 2 isX2 =5−PX +0.02I2 +0.2PY a) What is the market demand function for total X (= X1+X2) as a function of PX, I1,I2, and PY . b) Graph the two individual demand curves (with X on the horizontal axis,PX on the vertical axis) for the case I1 = 1000, I2 = 1000, and PY = 10. c) Using these individual demand curves, construct the market demand curve for total X. What is the algebraic equation for this curve? d) Now suppose I1 increases to 1100 and I2 decreases to 900. How would the market demand curve shift? How would the individual demand curves shift? Graph these new curves. e) Suppose PY rises to 15. Graph the new individual and market demand curves that would result.
- The demand for butter is given by 120-4pd and the supply is 2ps-30, where pd and ps are, respectively the price paid by demanders and the price received by suppliers. a: Draw the demand and supply functions. b: Find the equilibrium quantity and price, and show them on the graph. c: Suppose a drought strikes that shifts the supply functions to 2ps-60. The demand remains the same. Draw the new supply function, and find the new equilibrium price and quantity.Suppose products A and B have demand and supply equations that are related to each other If q, and qe are the quantities produced and sold of A and B. respectively, and pa and pg are their respective prices, the table below shows the demand equationsn and the supply equations. Eliminate q, and qy to get the equilibrium prices. demand equations qA =3-PA * Po e - 26 + PA "PB supply equations 4A= -5+ 4pA - 3pPg 48 = -7-3p, + 4pe The prices are Pa S and PeS (Round to the nearest cent as needed)Assume that one week sneakers sold at $150.00 and sell 80 units., next week they price them at $140 and sell 100 units. a. Assuming demand is approximately linear, determine the demand function b. Given: 1.7 p +42.i. Determine: Equilibrium price and Equilibrium quantity c. Draw both the demand and supply curves