Microeconomics questions

clarab123

Hi I need help with these questions as I don't really understand then. Hope someone and answer these questions for me and explain the answers too. Thanks
Q1: Given Qd = 38 - 8P(demand curve) and Qs = -10 + 4P (supply curve), where Qd and Qs are the quantities demanded and supplied respectively, expressed in thousands of units per month and P is price in €s.
The equilibrium price and quantity is:
a. €2 and 8000 units;
b. €3 and 7000 units;
c. €4 and 6000 units;
d. €6 and 4000 units.

Q2; The demand curve for CDs is given by Qd = 38 - 8P. The Arc Price Elasticity of demand between P=2 and P=4 is:
a. -1.71;
b. -0.51;
c. -0.91;
d. -3.21.

Q3: When supply decreases and demand does not change, the equilibrium quantity;
a. increases and the price rises;
b. decrease and the price falls;
c. decreases and the price rises;
d. increases and the price falls.

Q4: The demand for oranges will be generally more price inelastic:
a. the higher their price;
b. the more subtitue fruits are avaibable;
c. the lower is the buyers income;
d. the more the customer's health requires Vitamin C in the Diet


Please help as I am really finding it difficult to understand economics.

Mr. G

I think this would be more suited to the LC forum, but since you asked I may as well help you out a bit

clarab123 wrote: »

Q3: When supply decreases and demand does not change, the equilibrium quantity;
a. increases and the price rises;
b. decrease and the price falls;
c. decreases and the price rises;
d. increases and the price falls.

Draw it out on a piece of paper and think about it. The law of demand states that as the price of a product increases, a lower quantity will be demanded; likewise, as the price of a product decreases, a higher quantity will be demanded.

So answer must be c, as equilibrium quantity falls, price rises.

clarab123 wrote: »

Q4: The demand for oranges will be generally more price inelastic:
a. the higher their price;
b. the more subtitue fruits are avaibable;
c. the lower is the buyers income;
d. the more the customer's health requires Vitamin C in the Diet

Price inelastic is where the supply and demand for a good is unaffected when the price of that good or service changes. So say you have are a diabetic, you will still buy the same amount of medicine regardless of the price as it is a vital medicine. I can't think of any other examples. Therefore, the answer is d.

Hope that makes sense.

clarab123

thats great thank you so much big help by any chance would you mind explaing q1 and q2 if u don't mind

Mr. G

clarab123 wrote: »

thats great thank you so much big help by any chance would you mind explaing q1 and q2 if u don't mind

Yeah sure I will do it tomorrow..

What book do you have? Assuming you are in LC

clarab123

Thank you microeconomics 2nd edition by N. Gregory Mankiw and Mark P. Taylor..no im in college sitting microeconomics repeat exam on thursday

Mr. G

Sorry I forgot about this. I think if you try and work it out it will stick better.

clarab123

ya but my problem is i dont know how to do it at all !

Mr. G

This might help.

http://www.dummies.com/how-to/content/finding-market-equilibrium-price-and-quantity.html