1) Due to a recession that lowered incomes, the 2008 market prices for last-minu
ID: 1148732 • Letter: 1
Question
1) Due to a recession that lowered incomes, the 2008 market prices for last-minute rentals of U.S. beachfront properties were lower than usual. Suppose that the inverse demand function for renting a beachfront property in Ocean City, New Jersey, during the first week of August is
p = 1500 - Q + (Y/40),
where Y is the median annual income of the people involved in this market, Q is quantity, and p is the rental price.The inverse supply function is p = (Q/4) + (Y/50) Derive the equilibrium price, p*, and the quantity, Q*, in terms of Y.
The equilibrium quantity, Q*, is
2) In a commentary piece on the rising cost of health insurance, ("Healthy, Wealthy, and Wise," Wall Street
Journal,
May 4, 2004, A20), economists John Cogan, GlennHubbard, and Daniel Kessler state, "Each percentage-point rise in health-insurance costs increases the number of uninsured by 300,000 people." Assuming that their claim is correct, demonstrate that the price elasticity of demand for health insurance depends on the number of people who are ins
What is the price elasticity if 194 million people are insured? If 194 people are insured then the price elasticity of demand for health insurance is ___.
3)
A subsidy is a negative tax in which the government gives people money instead of taking it from them. If the government applied a
$2.402.40
specific subsidy instead of a specific tax in the figure to the right, what would happen to the equilibrium price and quantity? Use the demand function and the after subsidy supply function to solve for the new equilibrium values. What is the incidence of the subsidy on consumers?
Prior to the subsidy, demand is Q= 286-20P and supply is Q= 88 +40p. The equilibrium price with the subsidy is p*__?
4)
3) Suppose that the demand function for aluminum is Q = 40- 0.2P
where p is the price paid by consumers in dollars per pound and Q is the quantity demanded measured in pounds. The supply curve for aluminum is estimated to be: Q = 0.2p such that n = 1
The pre-tax equilibrium price is 100, the pre-tax equilibrum quantity is?
4) Green et al. (2005) estimate the supply and demand curves for California processed tomatoes. The supply function is: ln(Qs) = 0.200 + 0.550 ln(p), where Q is the quantity of processing tomatoes in millions of tons per year and p is the price in dollars per ton. The demand function is:
ln(Qd) = 2.600 - 0.200 ln(p) + 0.150ln (pt)
where Pt is the price of tomato paste (which is what processing tomatoes are used to produce) in dollars per ton. Let the price of tomato paste, pt be $110.
Suppose that the government imposes a price support on processing tomatoes at $77
per ton. The government will buy as much as farmers want to sell at that price. Thus, processing firms pay
$77.
How many tons of processing tomatoes will firms buy? ___ units(million tons per year).(Enter a numeric response using a real number rounded to three decimal places.)
5)
3) Green et al. (2005) estimate the supply and demand curves for California processed tomatoes. The supply function is: ln(Qs) = 0.2 + 0.55 ln(p), where Q is the quantity of processing tomatoes in millions of tons per year and p is the price in dollars per ton. The demand function is: ln(Qd)=2.60.2 ln(p) + 0.15 ln (pt), where pt is the price of tomato paste (which is what processing tomatoes are used to produce) in dollars per ton. Suppose Pt = 95. What is the demand function for processing tomatoes, where the quantity is solely a function of the price of processing tomatoes?
The demand function for procession tomatoes is ln(Q) = 3.28-0.2ln(p)
Solve for the equilibrium price and quantity of processing tomatoes. The equilibrium price is $__?
Explanation / Answer
(1)
Inverse demand function: p = 1,500 - Q + (Y/40)
Inverse supply function: p = (Q/4) + (Y/50)
In equilibrium, demand price equals supply price.
1,500 - Q + (Y/40) = (Q/4) + (Y/50)
Q + (Q/4) = 1,500 + (Y/40) - (Y/50)
5Q/4 = 1,500 + (Y/200)
250Q = 300,000 + Y [Multiplying both sides by 200]
Q* = (300,000 + Y) / 250 = 1,200 + (Y/250)
NOTE: As per Chegg Answering policy, first question is answered.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.