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Illustrate the following with supply or demand curves: a. In Joseph Heller’s iconic novel, catch 22, one of the characters was paid by the government to not grow alfalfa. According to the story’s narrator, “The more alfalfa he did not grow, the more money the government gave him, and he spent every penny he didn’t […]

The per-night rate for a 5-star hotel room in Macau has fallen from an average of MOP 1,992 in August 2014 to MOP 1,857 in August 2015. Demand for 5-star hotel rooms in Macau was falling during this period as well. This is hard to explain because the law of demand says that lower prices

In an effort to support the price of raw milk and dairy products, some dairy farmers advocate a subsidy in cash for every cow that they leave “unused”. They argue that the subsidy increases the “cost” of dairy farming and that it will reduce supply and increase the price of competitively produced dairy products. Critics

Many cruise lines offer 5-day trips. A disproportionate number of these trips leave port on Thursday and return late Monday. Why might this be true? Lines for free tickets to see free Shakespeare in Central Park are often long. A local politician has suggested that it would be a great service if the park provided

The taxi app Uber has a price hike mechanism called “surge pricing”, and when effective the minimum fare and per-kilometer fare will be set at a multiple of the normal level. Assume that in one of the cities it operates, the drivers have agreed the maximum multiple is 1.2x, i.e. 20 percent increase in fares.

Illustrate the following with supply or demand curves: a. A situation of excess demand for medicine in China before 1 June 2015 caused by a price cap for most drugs. b. The effect of a sharp decrease in poultry feed prices on the demand for pork.

The demand for hamburgers is shown in the following figures, with hamburgers priced in dollars in Figure a and pennies in Figure b. Calculate the slope of each demand curve and use your answers to explain why slope is not a useful measure of responsiveness of the quantity demanded to price changes. How can you

For each of the following products, explain whether de-mand is likely to be elastic or inelastic. a. Saltb. Apple juicec. Kebabsd. HAART, a type of combination therapy for HIV/AIDSe. Nintendo’s Wii video game consolesf. Computer mice

Use the following total revenue graph to identify which sections of the total revenue curve reflect elastic demand, inelastic demand, and unitary elastic demand. Explain your answers.

The cross-price elasticity values for three sets of products are listed in the table below. What can you conclude about the relationships between each of these sets of products?