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ECON 102 Study Guide - Final Guide: Price Ceiling, Paracetamol, Demand Curve

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turquoisegnu128
1 Oct 2018
School
University of Illinois
Department
Economics
Course
ECON 102
Professor
All

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ECON 102 Full Course Notes
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ECON 102 Full Course Notes
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Document Summary

Answers and discussion for form c: the price of good x decreases. As a result, the supply for good y increases (i. e. , the supply curve for good y shifts to the right). On the basis of this information, what can we say about good x and good. When we construct a supply curve, we allow the price of the good to vary, holding constant all other possible influences on sellers. Thus, when the price of an input changes, the supply curve will shift. If the price of the input increases, the supply curve will shift to the left. If the price of the input decreases, the supply curve will shift to the right. The other four choices are all associated with shifts in demand curves: in the market for zlambops, the price is per zlambop, the quantity demanded is 1000 zlambops, and the quantity supplied is 1000 zlambops.

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Related Questions

23) The price of good X falls and the demand for good Y decreases. We can conclude that A) X and Y are independent of each other. B) X and Y are substitutes. C) X is a normal good. D) X is an inferior good. E) X and Y are complements.

The generalized demand and supply functions for good X are

Qd = 10 -2Px - 4PY + M Qs = 10 + 2PX

  Where:

    QD = quantity demanded of good X

     PX = price of good X

     M = consumer income 

     PY = price of good Y

 

 

    QS = quantity supplied of good X

    PX = price of good X

 

A. Are good X and good Y substitutes or complements? Why?

B. Is good X a normal good or an inferior good? Why?

C. What is the demand function when PY = $4 and M = $600?

d. Use the demand function you found in part c. and solve for the equilibrium price (Po) and the equilibrium quantity (Qo).

e. Find the inverse demand function and the inverse supply function.

f. Sketch this market.

Suppose we have the following equations: Demand Curve: Q_D^X=-1,450-25P_X+12.5P_Y+.2Inc

Supply Curve: Q_S^X=-100+75P_X-25P_Y-12.5P_Z+10R

Where Q = quantity

Px = price of our good X

Inc = income = $8,000

R = rainfall = 20

PY = price of product Y = $5

PZ = price of product Z = $8

a) Calculate equilibrium price and quantity.

b) Is Good X a normal good or inferior good? Use elasticities to answer this, and explain.

c) Are Goods Y and Z substitutes or complements to our good X? Use elasticities to answer this, and explain. It is easiest to use simple calculus to calculate elasticities.