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9. If the quantity of frozen bananas demanded by the market is equal to 13, then what is the price of bananas? (a) $14/banana. (b) $2/banana. (c) $4/banana. (d) $3/banana.

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Related questions

6) 1This set of questions focus on elasticity.

a. John’s demand for bananas increases from 4 bananas to 6 bananas when his hourly wage rises from $18 to $30. What is his income elasticity of demand for bananas? Use the standard formula of percentage change to calculate this income elasticity. Are bananas normal or inferior goods for John?

b. John’s demand for bananas dropped from 10 bananas to 6 bananas when the price of apples decreased from $6 per apple to $5 per apple. What is his cross-price elasticity of bananas for apples? Use the arc elasticity formula for the percentage change to calculate this cross-price elasticity. Based upon your value for the cross-price elasticity of demand of bananas for apples, are these two goods substitutes or complements? Explain your answer.

c. Suppose at $4 per banana, Ben can supply an infinite quantity of bananas, but he will supply none at a price below $4. What do you know about his supply when price rises above $4? What is Ben’s price elasticity of supply?

3. (5 points) Jerry lives in an economy with two goods: bananas and apples. Bananas cost $1 each and apples cost $3 each. Suppose that Jenny is an optimizing consumer with indifference curves that are strictly convex, and that we observe that Jerry buys 1 banana and 4 apples. Draw a graph that shows Jerry's (1) budget constraint, (2) optimal consumption point, and (3) the indifference curve that goes through the optimum point. In your graph, place quantity of apples on the horizontal axis.

Assume that Home can produce two goods, apples and bananas. The unit labor requirement in apple production is 4, while it is 2 in banana production. Foreign’s unit labor requirement for apples is 8 and it is 2 for bananas. Assume that when these countries trade, Home specializes in apples, Foreign specializes in bananas and the world relative price of apples (PA/PB) = 2.

a. If these countries trade, which country will have a higher wage? Why is this the case?

b. Using a numerical example for prices, show how wages are derived in each country when they trade with each other.

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