* Would the introduction of maximum prices by a government solve the problem of scarcity: Scarcity results from scarce resources and unlimited wants. An effective maximum price would be set below the market equilibrium. Unless the government took additional measures it would result in excess demand and a smaller quantity sold at a lower price. While some would benefit from lower prices others would now go without the good. Overall the action would not reduce the level of scarcity. * Discuss
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____ ____ ____ 1. Refer to Figure 6-3. In panel (b)‚ with the price floor in effect‚ there will be a. a shortage of wheat. b. equilibrium in the market. c. a surplus of wheat. d. an excess demand for wheat. 2. The positive relationship between price and quantity supplied is called a. profit. b. a change in supply. c. a shift of the supply curve. d. the law of supply. 3. When quantity demanded decreases at every possible price‚ we know that the demand curve has a. shifted to the left. b. shifted
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MR c) What is cross-price elasticity? (2 marks) d) For each of the following pairs of goods state whether the cross-price elasticity is likely to be greater‚ smaller or equal to zero. (8 marks) i) Petrol‚ car ii) Tea‚ coffee iii) Nike trainers‚ generic brand trainers. tie‚ business suit. iv) e) In the discussion of elasticity and raising and lowering prices‚ economists suggest that if you have an elastic demand you should hesitate to raise your price‚ and that lowering price can possibly increase
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IB1 ECONOMICS: ELASTICITY ASSIGNMENT ANSWER IN THE SPACE PROVIDED 1. Calculate the price elasticity of demand (PED) for CD’s if an increase in the price of CD’s from 15 euro to 18 euro causes the quantity demand to fall from 1000 to 900 units. 2. According to your calculation above‚ do CD’s have elastic‚ inelastic or unit elastic demand? Explain your answer. 3. Explain the significance of the co-efficient of the PED calculated in question
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Problem Based Learning (PBL) project for MS1381 – Part 1 ________________________________________________________________________ Instructions to Students (a) Please form groups of 2 or 3. (b) There are 2 parts to this project. This is part 1. Part 2 will be released later. (b) The PBL project constitutes 10% of your overall assessment. (c) Analyze and work out the whole problem together as a group. (d) Each group must submit 1 written group report and 1 progress report for part 1 of this project
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Elasticity is a measure of the sensitivity of one thing‚ to another (Bannock‚ 2011‚ p.116). It could be divided into price‚ income and cross-price elasticity of demand and supply and they are known as PED‚ YED ‚XED and PES. They can be used to measure how the change in demand and supply of a product responds to the change in price‚ income and other commodities. Calculating price‚ income and crossprice elasticity can review the new cars market‚ it can be found that the demand and supply of new
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market a color slide film called Kodachrome in the late 1930s‚ and a color print film‚ Kodacolor‚ by 1954. At that time‚ it had over 90% of the color film market. Since Kodak sold its color film only as a package deal with processing included in the price‚ it also had over 90% of the color photofinishing market. The tying arrangement resulted in a government antitrust suit and a consent decree in 1954. The 1954 decree permanently enjoined Kodak from "[t]ying or otherwise connecting in any manner the
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PRICE ELASTICITY OF DEMAND (PED) & REVENUE Price elasticity of demand (PED) is particularly important to businesses‚ because of its effect on their revenue (income). Consider the following examples: 1) Mrs Robinson wants to increase her business’s revenue‚ but can’t decide whether she should increase or lower her prices. She currently charges £1 per unit and sells 1‚000 units. She knows that the PED for her product is (-) 0.4. What will happen to sales‚ sales revenue and profit if she: a) raises
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QUESTION 1 The demand for the apartments around that particular area will be relatively inelastic. When demand is relatively inelastic‚ a large amount of change in the price will still cause a small amount of change in the quantity. Assume that if there is a large amount of decrease in the price‚ it will only cause a small amount of increase in the quantity because the demand is relatively inelastic. Thus‚ the demand curve will be steeper. The factors that will cause the demand to be
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while conditioning the buyer to also buy the photofinishing product (because it was included in the price). Both decrees had supporting evidence of the high market power that Kodak had at the time‚ for which both cases were based. The conventional definition of market power is usually expressed as "the power to raise price." A company with market power has some amount of discretion to set its own price. Others can define market power as the power to force a purchaser to do something that he would
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