Can You comment on the answers I have given to the following questions?
Group 2 1. The nominal price of a Dell Latitude laptop in 2DDB was $1 ,DSU and the CPI that year was 201.6. The nominal price of a Dell Latitude laptop in 218 was $53G and the CPI that year was 251.1. What is the real price of a Dell Latitude laptop in EUGE- in terms of 21 3 dollars? By what percentage has the real price changed from 2005 to 2(113? Show your work. 2. Discuss and show graphically using a supply and demand graph how each of the following events will affect the market for Gala apples in CT. Make sure to discuss how each of these events will affect the equilibrium price and quantity of Gala apples. a) Consumers expectthe price of Gala apples to increase next month. Determine the current impact due to this expectation. b) An increase in the hourly wage paid to seasonal farm workers hired to help growing and harvesting Gala apples. Ignore the event in part a}. c) Assume that the changes described in parts a] and b) occur simultaneously. What is the overall impact on the equilibrium price and the equilibrium quantity of Gala apples? You are not required to draw a graph in answering this question, but fully explain. You don't know which curve shifts by more. 3. Calculate the cross price elasticity of demand if you know that a 19% decrease in the price of strawbem'es decreases the quantity of blueberries demanded by 14%. Is the response elastic, inelastic, or unit elastic at this price? Are strawberries and blueberries substitutes or complements?I Explain your answer and show your work. 4. Consider a competitive market for which the quantities demanded and supplied [per year} at various prices are given as follows: Demand (Millions) Supply {Millions} 2 1 2D 1 13 1 a) Calculate the price elasticity of demand when the price is $ED. b) Calculate the price elasticity of supply when the price is $60. 5. Ben likes to consume his brownie with a scoop of vanilla ice cream (one medium piece of brownie with exactly one scoop of ice cream}. Draw a set of indifference curves that represent the individual's preferences for brownies and vanilla ice cream [show brownies on the horizontal axis}. Indicate the direction in which the individual's satisfaction {or utility) is increasing. 6.15m individual consumes two goods, entertainment and food. Use the information in the table below to complete parts a and b. a} Illustrate the priceconsumption curve for entertainment and food. Make sure to appropriately label your graph. You will need to show the intercept values of each budget constraint and the list of the values of the optimal bundles {2.5 pts.) b} Illustrate the demand curve for entertainment (1.5 pts.}. Price of Price of Food Quantity of Quantity of Entertainment Entertainment Food Bonus Question (3 pie.) T. Suppose llex = BUY and lleyir = ZDX. The price of good X is $10. the price ofgood 'r' is $5, and the available income is $300. Find the utility maximizing bundle (X, T]. \ftab Because of the increase in costs of production, the ample producers will need to spend more to m the apples at each quantity level and as a result the supply of gala apples will decrease and shift lelt 2c Assuming that the changes in parts a and b occur simultaneously, the equilibriILIn price increases, but the equilibrium quantityr change is ambiguous. The eqlilibrium price increases because both the parts a and b increase the equilibrium price on their own, so when both of them occur simultaneously, the increase in equilibrilIn price is unambigrously seen. The eqtilibrium quantity of apples is ambiguous because we do not know which curve shifts by more- If we knew which more wilted more, we would be able to conclusively tell what happens to the equilibrium quantity. 3.Cross price elasticity of demand Decrease in quantity demand of bluebenies=1 4w decrease in the price of strawbernes 1%= 1.4 is the cross price elasticity of demand By this we can tell that goods are stlistitutes because the cross price elasticity of demand for substitutes is always positive, because the demand for one good increases as the price of the substitute good increases. The response is elastic, because the Cross price elasticity of demand is greater than one. 4a 41-2? Change in price EBBFEED = 33% change in price {$80$60} I {560} *{1}= 33.3% Change in quantity demanded 223320: 4.10% change in quantityr demanded {222}! {sermon}: 3.09% Price elasticity of demand: 3% change in demand! 3": change in price == 9.f33.3= 412? 4b price elasticity of supply =0.43 Change in price $60->$80 = 33% change in price ($80-$60) / ($60) *(100)= 33.3% Change in supply 14->16= (16-14)/ (14) *100=14.3% Price elasticity of demand= %change in supply/ %change in price 14.3/33.3= 0.43 Ice Cream 2 1 2 3 4 5 6 7 8 Brownies 5 Bens satisfaction is increasing as you move right in the graph6a Quantity of Entertainment 14,5 VADD-ONANNNONANONON PCC 9\\ 1 8, 15 7,26 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Quantity 34 36 25 26 AW-A -0 - 010 Optimal Bundles 7 Entertainment, 26 Food 8 Entertainment, 15 Food 9 Entertainment, 11 Food 14 Entertainment, 5 Food6b 14 8,10 B 10 Price of 7, 109, 10 Entertainme 14,10 nt ANDAOOOOO 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Quantity Demanded of Entertainment 7 the income maximizing bundle is 60 of good y as The marginal utility of good y is 4 (20/$5) while the marginal utility of good x is 2 (20/$10), so to maximize the marginal utility it makes sense to buy more of good Y
