In this market, it can be concluded that at a price level of $100 per unit, there is <em>C. a shortage of 0.4 million units.</em>
- This market shortage occurs because 0.4 million units of the goods were not supplied. There is excess demand and shortage in supply.
- The market demand increased from the equilibrium quantity of 5 million units to 5.2 million while the market supply reduced from the equilibrium quantity of 5 million units to 4.8 million.
- The shortage of 0.4 million units results from the difference between the quantity demanded (5.2 million) and the quantity supplied (4.8 million) as a result of reduced price.
Thus, the market shortage shows the reduced willingness of suppliers to supply goods at the new price of $100 per unit instead of at the acceptable equilibrium price of $120 per unit.
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If we want to produce more computers, we must give up the production of some cameras, which is referred to as production efficiency.
Production efficiency is a word used in economics to describe the point at which an economy or other entity can no longer produce more of one good without reducing the level of production of a different one. When production is allegedly taking place along a production possibility frontier, something occurs (PPF). The terms "production efficiency" and "productive efficiency" are interchangeable. Similar to operational efficiency, productive efficiency refers to how effectively something is performing. The mapping of a production possibility frontier is central to the economic idea of production efficiency. When analyzing economic operational efficiency, economists and operational analysts often additionally take into account a few more financial variables, such as capacity utilization and cost-return efficiency.
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<u>Solution and Explanation:</u>
The given data is as follows:
Error rate = 4%, per hour payment of inspector = $8, inspection of units = at the rate of 49 per hour, cost = $9 per unit
The problem can be solved as considering an opportunity to have an improvement of 4% in the quality.
In case inspector is not hired then it will cost .04 multiply 9= $.3.6 per unit and in case the inspector is hired it will cost $ 0.163 approx.(8 divided by 49).
Therefore, on comparison, it is recommended to hire the inspector.
Answer:
Price elasticity of demand = 2.6
Explanation:
Given:
Old price (P0) = $70
New price (P1) = $60
Old sales (Q0) = 10,000 units
New sales (Q1) = 15,000 units
Computation of Price elasticity of demand(e):
Midpoint method
By putting the value:
e = 2.6
