...Elasticities of Demand and Supply Corn is an amazing source of alternative energy. Wood, coal and gas have proven to be effective sources of energy; however, corn has proven to be the most effective alternate source of energy in comparison. The actual cob of corn is dense and slow burning which is the reason it is such a good source of energy. While lowering the cost of energy for a heating system, corn can also lower the cost per energy consumed. (Energy Refuge.com, 2006-2009) The rising cost of gasoline and demand for less reliance on foreign oil have caused the need for ethanol to increaase, the by-product of corn sugars that have been fermented and distilled. (Keen, 2006) (1). The increased need to use corn as an alternate source of energy (demand) will decrease the demand of the supply of corn substitutes such as coal, wood, gas, etc. Another substitute is the soybean. The increased demand for corn could cause the demand for soybeans to decrease. This would leave farmers the decision of how many soybeans to plant in comparison to corn. When making this decision the farmers will take into account many factors such as which be more beneficial to the farmers, which will be more beneficial to the consumers, which is easier and cheaper to produce and which will be more beneficial economically. Due to the increased need for corn as energy the price of corn has increased compared to the price of soybeans. This is causing farmers to decrease their soybean crops and increase their...
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...Price Elasticity and Supply & Demand Fill in the matrix below and describe how changes in price or quantity of the goods and services affect either supply or demand and the equilibrium price. Use the graphs from your book and the Tomlinson video tutorials as a tool to help you answer questions about the changes in price and quantity Event Market affected by event Shift in supply, demand, or both. Explain your answer. Change in equilibrium Frozen orange crops in California Orange juice Supply (left)—Not as many available oranges to offer consumers. Price will increase and quantity will decrease. Hurricanes in the Gulf Coast Oil and seafood Supply (left)—Not as much oil or seafood available to offer consumers. Price will increase and quantity will decrease. Cost of cotton decreases Clothing Supply (right) – More clothing available to offer consumers. Price will decrease and quantity will increase. Technology improves efficiency in pasta manufacturing Pasta or pasta related products (supermarket foods, restaurant foods) Supply (right) – More pasta or pasta related products available to offer consumers. Price will decrease and quantity will increase. 1. What do substitutes refer to in economics? Give an example of two substitutes. A substitute refers to an alternate good that consumers are able to purchase when the original good had a price increase. Examples of substitutes are when consumers buy margarine when the price of butter increases or buy miracle whip when the...
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...Organizing Function of Southwest Regional Maintenance Center Corey L. Jackson RES 341 January 6, 2012 Donald Ratliff Southwest Regional Maintenance Center (SWRMC) supports the Navy fleet by offering world-class maintenance to the ships, allowing them to complete their missions. Not only does SWRMC provide a forum for Sailors to maintain their job training, it supplements Ship’s Force, allowing time off for the crew onboard the ships. Also utilized is a hub for contractors in the San Diego region to provide maintenance and some training to the waterfront, using a Multi-Ship, Multi-Option (MSMO) contract. Working with so many entities makes organizing a vital key to the execution of the work provided by SWRMC. Resources allow for the optimized flow of a process, and aid it in becoming better, cheaper, and faster. Monetary and human resources make SWRMC successful, by allowing it to continuously provide top notched support to the Naval Fleet. SWRMC is a tall, hierarchical, decentralized organization. Belonging to the Navy causes it to follow the “Chain of Command” concept, where all of the major decisions are made at the top, then filter down to the different commands. However, it is decentralized because there is Executive Leadership at each command that makes decisions that affect them individually. South West Regional Maintenance Center runs as a functional organization. This organization tends to be customer-based, and as organic as possible. Monetary Resources Monetary...
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...Supply and Demand and Price Elasticity Paper Betty Hargrove ECO/212 January 30, 2013 Vivek Singhal Introduction After careful evaluation of our daily commodities we have chosen, soap, oil, sugar, salt, tissue, flour, toothpaste, deodorant, electricity, and wheat. These lists of commodities are necessary in a basic style of life. Our chosen product to focus on throughout our paper is sugar. We will address the supply and demand shift of sugar in a market economy. Furthermore, we will address supply and demand and price elasticity as well as whether our chosen commodity is a necessity or a luxury. Supply and Demand Shift There are limited explanations of why the demand and shifts in sugar vary. One of these reasons is because of the federal tariffs that are put on sugar. A tariff or tax on the import or even export increases the price and make it less in demand. No one wants to pay more for anything that we were paying less for a week ago. Also now there are a few different substitutes of sugar then using the real things. There are brands such as Equal, Splenda, and Sweet and Low. These are known as artificial sugar substitutes. These artificial sugar substitutes are sometimes found in food that we consume daily depending on our likes. Items that are, labeled as “diet” or “sugar free” use artificial sweeteners. There is “sugar free gum” and “diet soda”. These products typically have artificial sweeteners. The demand for the sugar is how much the consumers are willing...
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...This assignment provides an economic analysis of South African Maize. The objective of the assignment is to find a non –governmental price regulated commodity and examine the determinants of demand and supply, as well as prices, and elasticities of the commodity Table of Contents Introduction: 2 The determinants causing shifts in demand and supply: 3 Price movements: 4 Price and/or income elasticities: 4 Conclusion: 5 References: 5 Introduction: In Africa, South Africa’s economy is one of the largest (one-quarter) contributor’s to the nation’s economic Gross Domestic Product. Even though the manufacturing sector is now a sizeable donor to the South African economy, commodities do still provide an ample section to the economy (Simpson, 2012). A commodity is known as a raw material this is exchanged (bought and sold) by trade partners. It can also be a primary agricultural product (Parkin et al., 2008: ). South Africa’s agricultural sector does not have a large impact on a global scale upon the world’s agricultural trade. Although does export cereal grains in large quantities as well as stocks the country with cereal grains’ seeing as it is one of South Africa’s staple foods (Simpson, 2012). In economics, questions result from people wanting more than they can get. What is available for individual’s consumption is limited by time; incomes received; and by the prices of the goods and services people must pay. The goods and services available are constrained...
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...viewing the issue of health insurance and how insurance rates are directly related to the amount of alcohol consumed. Here, we can consider how economists “think at the margin”. The change in health rates would have to be more than marginal to affect a change in a life style such as alcohol consumption. Similarly, if one thinks rationally, the higher the insurance rates are for alcohol consumers, the less these consumers will drink. Finally, “rational people respond to incentives”. If insurance companies offer price incentives to drink less, a rational person would respond by drinking less. Cooksey, J. A., Knapp, K. K., Walton, S. M., & Cultice, J. M. (2002). Challenges To The Pharmacist Profession From Escalating Pharmaceutical Demand. Health Affairs, 21(5), 182. Cook, P.J., & Moore, M.J. (2002). The Economics of Alcohol Abuse and Alcohol-Control Policies. Health Affairs, 21(2),...
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...Chapter 4 Elasticity • • • • I. The price elasticity of demand measures how strongly demanders respond to a change in the price of a good. The price elasticity of demand can be used to make quantitative predictions of how changes affect the price and quantity demanded of a good. The income elasticity of demand measures how strongly demanders respond to a change in income, and the cross elasticity of demand measures how strongly demanders respond to the change in the price of another good. The price elasticity of supply measures how strongly suppliers respond to a change in the price of a good. Price Elasticity of Demand • In general, elasticity measures responsiveness. The price elasticity of demand measures how responsive demanders are to a change in the price of the good. This information is often useful for both businesses and governments. • The price elasticity of demand is a units-‐free measure of the ...
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...C h a p t e r 4 ELASTICITY Topic: Calculating Elasticity Skill: Conceptual Price Elasticity of Demand 4) Topic: The Price Elasticity of Demand Skill: Conceptual 1) The slope of a demand curve depends on A) the units used to measure price and the units used to measure quantity. B) the units used to measure price but not the units used to measure quantity. C) the units used to measure quantity but not the units used to measure price. D) neither the units used to measure price nor the units used to measure quantity. A) B) C) D) When the quantity of coal is measured in kilograms instead of pounds, the demand for coal becomes more elastic. less elastic. neither more nor less elastic. undefined. Answer: C Topic: Calculating Elasticity Skill: Recognition 5) The price elasticity of demand equals A) the change in the price divided by the change in quantity demanded. B) the change in the quantity demanded divided by the change in price. C) the percentage change in the price divided by the percentage change in the quantity demanded. D) the percentage change in the quantity demanded divided by the percentage change in the price. Answer: A Topic: The Price Elasticity of Demand Skill: Conceptual 2) The price elasticity of demand depends on A) the units used to measure price and the units used to measure quantity. B) the units used to measure price but not the units used to measure quantity. C) the units used to measure...
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...Chapter 4 Elasticity 4.1 Price Elasticity of Demand 1) A price elasticity of demand of 2 means that a 10 percent increase in price will result in a A) 2 percent decrease in quantity demanded. B) 20 percent decrease in quantity demanded. C) 5 percent decrease in quantity demanded. D) 2 percent increase in quantity demanded. E) 20 percent increase in quantity demanded. Answer: B Diff: 2 Type: MC Topic: Price Elasticity of Demand 2) The price elasticity of demand is a units-free measure of the responsiveness of the ________ when all other influences on buying plans remain the same. A) quantity demanded to a change in the price of a substitute or complement B) quantity demanded to a change in income C) quantity demanded of a good to a change in its price D) price to a change in quantity demanded E) none of the above Answer: C Diff: 1 Type: MC Topic: Price Elasticity of Demand 3) The concept used by economists to indicate the responsiveness of the quantity demanded of a good to a change in its price is the A) cross elasticity of demand. B) income elasticity of demand. C) substitute elasticity of demand. D) price elasticity of demand. E) elasticity of supply. Answer: D Diff: 1 Type: MC Topic: Price Elasticity of Demand 4) If a 10 percent rise in price leads to an 8 percent decrease in quantity demanded, the price elasticity of demand is A) 0.8. B) 1.25. C) 8. D) 0.125. E) 80. Answer: A Diff: 2 Type: MC Topic: Price...
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...4 Elasticity: A Measure of Responsiveness Chapter Summary This chapter explored the numbers behind the laws of demand and supply. The law of demand tells us that an increase in price decreases the quantity demanded, ceteris paribus. If we know the price elasticity of demand for a particular product, we can determine just how much less of it will be purchased at the higher price. Similarly, if we know the price elasticity of supply for a product, we can determine just how much more of it will be supplied at a higher price. Here are the main points of the chapter: • The price elasticity of demand—defined as the percentage change in quantity demanded divided by the percentage change in price—measures the responsiveness of consumers to changes in price. • Demand is relatively elastic if there are good substitutes. • If demand is elastic, the relationship between price and total revenue is negative. If demand is inelastic, the relationship between price and total revenue is positive. • The price elasticity of supply—defined as the percentage change in quantity supplied divided by the percentage change in price—measures the responsiveness of producers to changes in price. • If we know the elasticities of demand and supply, we can predict the percentage change in price resulting from a change in demand or supply. Applying the Concepts After reading this chapter, you should be able to answer these four key questions: 1. How does the price elasticity of demand vary over time? 2...
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...INTRODUCTION TO ECONOMICS Elasticity & Taxation Blanquerna-Universitat Ramon Llull Salvador Illa Roca 2014-2015 1 Current events 2 3 4 Elasticity 5 Where we are… 1. 2. 3. 4. In the subfield of Microeconomics Studying the S&D model… …which describes how competitive markets work Have studied… 1. how much consumers & producers gain from participation in the market 2. Why governments intervene in markets and what are the consequences 5. Will focus on… 1. What is elasticity 2. taxation 6 Swine Flu Swine Flu Swine Flu http://www.nytimes.com/2009/04/28/health/28flu.html?ref=health Swine Flu 1. What happens with the DC? 2. What happens with the SC? 3. What happens with the price? Why? 4. Should Government intervene? Swine Flu European Council, Parliamentary Assembly Summary On 11 June 2009, the World Health Organization (WHO) officially declared “Pandemic (H1N1) 2009”. The way in which the H1N1 influenza pandemic has been handled, not only by WHO, but also by the competent health authorities at the level of the European Union and at national level, gives rise to alarm. Some of the consequences of decisions taken and advice given are particularly troubling, as they led to distortion of priorities of public health services across Europe, waste of large sums of public money and also unjustified scares and fears about health risks faced by the European public at large. Grave shortcomings have been identified regarding...
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...Exercise 6 Solution Chapter 6 Elasticity: The Responsiveness of Demand and Supply 6.1 The Price Elasticity of Demand and Its Measurement 1) Price elasticity of demand measures A) how responsive suppliers are to price changes. B) how responsive sales are to changes in the price of a related good. C) how responsive quantity demanded is to a change in price. D) how responsive sales are to a change in buyers' incomes. Answer: C Comment: Recurring Diff: 1 Page Ref: 168-169/168-169 Topic: Price Elasticity of Demand Objective: LO1: Define price elasticity of demand and understand how to measure it. AACSB: Reflective Thinking Special Feature: None 2) If the percentage increase in price is 15 percent and the value of the price elasticity of demand is -3, then quantity demanded A) will increase by 45 percent. B) will increase by 5 percent. C) will decrease by 45 percent. D) will decrease by 5 percent. Answer: C Comment: Recurring Diff: 2 Page Ref: 168-169/168-169 Topic: Price Elasticity of Demand Objective: LO1: Define price elasticity of demand and understand how to measure it. AACSB: Analytic Skills Special Feature: None 3) If demand is inelastic, the absolute value of the price elasticity of demand is A) one. B) less than one. C) greater than one. D) greater than the absolute value of the slope of the demand curve. Answer: B Comment:...
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...Market Demand The demand for a good or service is defined as quantities of a good or service that people are ready to buy at various prices within some given time period, other factors besides price held constant. And law of demand is the inverse relationship between price and the quantity demanded. It means the higher the price, the lower quantity demanded and vice-versa. A change of demand can be affected by two factors. First, the changes of price result in the changes in quantity demanded. In this term, change occurs only at the point in the curve. Curve line does not shift. Second, changes in the non-price determinants result in changes in demand. This led to curve shifts to the left or to the right. There are 5 factors of non-price determinants of demand. Here are: 1. Taste and preferences. There are many factors that trigger these factors include advertising, promotion, and even the government reports related to specific goods or services. 2. Income. Buying power is closely related to the demand of a product. Increased public income means demand also increases and vice versa. 3. Price of related products. -> Substitute or complementary products. 4. Future expectations. 5. Number of buyers. Market Supply Definition of supply is Quantities of a good or service that people are ready to sell at various prices within some given time period, other factors besides price held constant. The difference between demand and supply is the word sell for...
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...Q1) For many crops, a strange situation arises a bad crop year results in a good year for farm incomes, and a good crop year results in a bad year for farm incomes. Explain this framer’s dilemma using demand and supply analysis with a relevant example. Answer: The Farmer’s Dilemma: The Farmer’s Dilemma For many crops, a strange situation arises a bad crop year results in a good year for farm incomes, and a good crop year results in a bad year for farm incomes. How can this be? Price elasticity gives us the answer: Bad crop year: supply decreases, prices for farm products rise, but quantity demanded doesn’t fall very much. The quantity demanded of farm products is not very responsive to changes in prices Good crop year: supply increases, prices for farm products fall, but quantity demanded doesn’t increase very much. The quantity demanded of farm products is not very responsive to changes in prices It is easy to show this with a graph. But first we need yet another concept: Total Revenue = Price x Quantity Elasticity and Total Revenue: Elasticity and Total Revenue TR = P x Q If P goes down Q goes up, but what happens to TR? If P goes up Q goes down, but what happens to TR? Elasticity can answer the question…. Elasticity to the Rescue….: Elasticity to the Rescue…. Ep > 1 Responsive or elastic %ΔQd (10%) > %ΔP (5%) if P goes down (up) total revenue goes up (down) Ep < 1 Not responsive or inelastic %ΔQd (5%) < %ΔP (10%) if P goes down (up) total revenue goes down (up) Ep = 1 unit...
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...Elasticity Introduction This assignment will cover the core topic of economics i.e. Elasticity. Elasticity is concern to two major economic factors without no economy can survive, which are Demand and Supply because if we are not familiar with the demand and supply how can we come to know that how much demand of a particular item needs in the market and how much supply have to prepare to earn the revenue or maximum profit. Therefore, first, the theoretical concept of elasticity regarding demand and supply will be explained and then it will be applied on UAE economy. Body: Theoretical Concept of Elasticity Elasticity can be defined as the degree of responsiveness in quantity demanded and quantity supplied in order to changes in price or to one of its determinants. These are some terms relating to measure the elasticities in term of demand and supply: Price elasticity of demand, Arc elasticity of demand, Income elasticity of demand, Cross elasticity of demand, Price elasticity of supply (Gans, 2011). Price Elasticity of Demand: It can be stated as to what extent or to what degree, quantity demanded changes as an outcome of a change in price is called elasticity of demand. If we divide the marginal demand function by the average demand function (Gans, 2011), we will get elasticity of demand. Mathematically representation: Measurements of Elasticity of Demand (E) There are three methods adopted to measure the Elasticity of Demand 1. Total Quality Method This...
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