Chapter 4

Chapter 4 - Supply and Demand: Practice Chapter 4 Market...

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Supply and Demand: Practice Chapter 4
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Market for Peanuts 1. Draw the market equilibrium for peanuts and label the equilibrium point A. 2. Assume peanuts are an inferior good. Illustrate in the above graph what would happen to the market for peanuts during a recession (label the new equilibrium point B) 3. Now suppose that, in addition to the recession, a peanut blight destroys much of the nation‘s peanut crop. Use your diagram to show what must happen to the equilibrium price as a result of the recession and peanut blight.
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Consumer‘s surplus – Producer‘s surplus Consumer‘s surplus: Maximum buying price – Price paid Producer‘s surplus: Price received – Minimum selling price
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Pair `n share You are the owner of a movie theater which has mostly empty seats during weekdays but which is full during the weekends. How could you change your pricing strategy to maximize profits?
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Price Quantity S D 5 6 12 Shortage 12 - 6 = 6 6 If price is too low… 7
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Price Quantity S D 9 14 Surplus 14 - 6 = 8 6 8 8 If price is too high… 7
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This note was uploaded on 04/09/2008 for the course ECO 201 taught by Professor Zenker during the Spring '08 term at Elon.

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Chapter 4 - Supply and Demand: Practice Chapter 4 Market...

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