PS_CH02[1] - ECON 2296 - Prac tic e Questions Chapter 2 1)...

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ECON 2296 Practice Questions Chapter 2 - 1) 2) The daily demand for hotel rooms on Manhattan Island in New York is given by the equation QD 250,000 375P. The daily supply of hotel rooms on Manhattan Island is given by the equation QS 15,000 212.5P. Diagram these demand and supply curves in price and quantity space. What is the equilibrium price and quantity of hotel rooms on Manhattan Island? The inverse demand curve for product X is given by: P X 25 0.005Q 0.15P Y , where P X represents price in dollars per unit, Q represents rate of sales in pounds per week, and P Y represents selling price of another product Y in dollars per unit. The inverse supply curve of product X is given by: PX 5 0.004Q. a. Determine the equilibrium price and sales of X. Let P Y $10. b. Determine whether X and Y are substitutes or complements. 1 = - = + = - + = + =
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3) 4) 5) 6) 7) Suppose a new discovery in computer manufacturing has just made computer production cheaper. Also, the popularity and usefulness of computers continues to grow. Use Supply and Demand analysis to predict how these shocks will affect equilibrium price and quantity of computers. Is there enough information to determine if market prices will rise or fall? Why? Harding Enterprises has developed a new product called the Gillooly Shillelagh. The market demand for this product is given as follows: Q 240 4P a. At what price is the price elasticity of demand equal to zero? b. At what price is demand infinitely elastic? c. At what price is the price elasticity of demand equal to one? d. If the shillelagh is priced at $40, what is the point price elasticity of demand? The monthly supply of desktop personal computers is given by the equation 15,000 43.75 At a price of $800, what is the price elasticity of supply? Midcontinent Plastics makes 80 fiberglass truck hoods per day for large truck manufacturers. Each hood sells for $500.00. Midcontinent sells all of its product to the large truck manufacturers. Suppose the own price elasticity of demand for hoods is 0.4 and the price elasticity of supply is 1.5. a.
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PS_CH02[1] - ECON 2296 - Prac tic e Questions Chapter 2 1)...

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