Exam 14: Market Demand

If a price changes, then changes in consumption at the intensive margin are changes that happen because consumers alter the amounts that they consume but do not either stop consuming or start consuming the good.

A peck is of a bushel. If the price elasticity of demand for peas is -0.10 when peas are measured in bushels, then when peas are measured in pecks, the price elasticity of demand for peas will be

If consumer 1 has the inverse demand function given by p = 15 - x and consumer 2 has the inverse demand function given by p = 20 - 3x, then the total quantity demanded by the two consumers is x = 7 when the price p, is 11.

Ed has 100 tons of manure. The lowest price at which he is willing to sell it is $10 per ton. Fred wants to buy 100 tons of manure. The most he is willing to pay is $8 per ton. The federal government offers to subsidize manure sales at a rate of $1 per ton. If Ed and Fred are the only people who deal in manure, then the deadweight loss caused by the subsidy is

If the demand for the Weekly World News at a local grocery store is described by Q = 2,500 - 400P - for I = $15,000 and P = $1.50, the marginal revenue of an additional paper sold at this store is

If the price of cucumbers falls by $2 per pound, then the demand for cucumbers will rise by 10 pounds. Therefore we can conclude that the demand for cucumbers is elastic.

At a large institution of higher learning, the demand for football tickets at each game is 100,000 - 8,000p. If the capacity of the stadium at that university is 60,000 seats, what is the revenue maximizing price for this university to charge per ticket?

At the price of $100, tourists demand 237 airplane tickets. At the same price, business travelers demand 247. At the price $110, tourists demand 127 tickets and business travelers demand 127. Assuming that the demand curves of business travelers and tourists are both linear over this price range, what is the price elasticity of demand at the price $100?

The demand for Craftmatic Adjustable Beds is described by Q_c = P^-1.40_cI^-0.60P^0.20_mA^0.25, where Q_c is the number of Craftmatic Adjustable Beds demanded, P_c is the price of a Craftmatic Adjustable Bed, I is per capita income, P_m is the price of a battery-powered massage pillow, and A is the advertising budget. a. If the marginal cost of producing a Craftmatic Adjustable Bed is $200, what is the profit-maximizing price? b. Per capita income in the United States is forecast to rise by 3% next year. How will this impact Craftmatic's sales? c. The price of battery-powered massage pillows suddenly fell by 10%. How will this impact Craftmatic's sales?

Demand for Barbara Streisand CDs is equal to Q_s = P^2.50_sI^1.80P^0.60_c, where Q_s is the number of CDs, P_s is the price of a Streisand CD, I is per capita income, and P_c is the price of a Karen Carpenter CD. Streisand and Carpenter CDs

If the supply curve for x is given by x = 100p², then the inverse supply curve is given by

If the amount of money that people are willing to spend on a good stays the same when its price doubles, then demand for that good must have a price elasticity of demand smaller in absolute value than 1.

If the demand curve were plotted on graph paper with logarithmic scales on both axes, then its slope would be the elasticity of demand.

Bart Wurst runs the only hot-dog stand in a large park in a large boring town. On Sundays people in this town all sit in the park and sunbathe. For any t between 0 and 30, the number of people who are sitting within t minutes of Bart's stand is 10t². People in Bart's town are lazy and hate to walk. They think that every minute of walking they do is as bad as spending $.10. Everybody in the park has a reservation price of $1 for a hot dog, where the cost of a hot dog includes the subjective cost of walking as well as the money price they have to pay when they get there. (Nobody has ever thought of fetching a hot dog for someone else.) Find a formula for the demand curve for Bart's hot dogs. Explain how you got it.

In Gas Pump, South Dakota, every Buick owner's demand for gasoline is 20 - 5p for p less than or equal to 4 and 0 for p > 4. Every Dodge owner's demand is 15 - 3p for p less than or equal to 5 and 0 for p > 5. Suppose that Gas Pump has 100 Buick owners and 50 Dodge owners. If the price of gasoline is $4.25, what is the total amount of gasoline demanded in Gas Pump?

The demand for watches is Q = 1,000P^-0.50I^-1. Assume that per capita income I is $5,000. At a price P of $50, the price elasticity of demand is

The demand for tickets to a rock concert is given by D(p) = 200,000 - 10,000p, where p is the price of tickets. If the price of tickets is $17, then the price elasticity of demand for tickets is

The inverse demand curve P(x) for a good x measures the price per unit at which the quantity x would be demanded.

Using the graph of a demand curve, explain why marginal revenue is less than price.

If Castor's demand curve is described by q = 40 - p and Pollux's demand curve is given by q = 60 - 2p, then each of their demand curves will pass through the point q = 20, p = 20. Therefore if they are the only two consumers in a market, the market demand curve will also pass through q = 20, p = 20.