Which of the following best represents a derived demand? the demand for tickets
ID: 1211133 • Letter: W
Question
Which of the following best represents a derived demand? the demand for tickets to the World Series by baseball fans. the demand to the services of a personal trainer by individuals. the demand for dog food by neighborhood dog owners. the demand for the service of paralegals by law firms. To be successful in increasing the price of their product, members of a cartel must: restrict market output. encourage new firms to enter the market. significantly increase market output. find ways to lower costs of production. the demand for gadgets is likely to be more price-elastic when: there are no substitutes for gadgets available in the marketplace. consumers are given a long period of time to adjust to a change in the price of gadgets. the price of a gadget is a very large percentage of the typical consumer's budget. gadgets are considered a luxury by consumers.Explanation / Answer
51.
The derived demand is the demand for a good that is derived from demand for another goods and services. This is generally occurs in production and demand for inputs is derived demand from the demand for the goodthat it produces. The classic example isemployer and employees. The demand for employees is derived from the demand for profit of the employer.
Therefore, the correct option is
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52.
In an economy when a relatively few firms control all or most of the production and sales of a product, the market is characterized as Oligopoly. The oligopoly is characterized by the mutual interdependence among firms, that is, a firm must shape its policy with an eye on its competing firms. However it is very difficult to predict how firm will react in situation of mutual interdependence. This uncertainty of deciding the right policy of its opponent seriously jeopardizes the firm’s position. Hence the firms tempted to collude in order to maximize its profits. The firms who collude and agree on various sales, pricing and other decisions are called cartel and their agreement is cartel agreement.
Cartel may lead to the joint profit maximization by the colluding firm. The firms determine the products market demand and set their marginal revenue curve. The marginal cost curve is determined from the horizontal summation of the marginal cost curve of the oligopolists. The equilibrium quantity is determined where the marginal cost curve intersects the marginal revenue curve and the equilibrium price is determined by the equilibrium quantity from the demand curve. If oligopoly is maintained in the long run it charges higher price and produces less output. Therefore, the correct option is:
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53.
The price elasticity of demand measures the percentage change in demand due to percentage change in price. The price elasticity of demand depends on:
The price elasticity depends on the period of time. The consumer takes time to adjust their demand in response to the price change in the market. The longer the time period the larger price responsive is the demand. The price elasticity of demand depends on the degree of substitutability of the competing product.
The close the substitute is the competing product the more the price responsive the demand will be. The price elasticity depends on the share of income spent on the good.
A smaller share of income implies the change in price will have little impact on quantity demanded. This is the case with the necessary food items. On the other hand, the increase in price of the good which need a larger share of the income will prompt the buyers to cut the amount of good consumed drastically. Therefore, the more the fraction of the income spent on the good the larger will be the price elasticity of demand. The demand will be price inelastic.
Therefore, the correct option is:
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