1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
mezya [45]
3 years ago
15

After graduating from college, you are hired by the Ford automobile company as an economic analyst. For your first project, you

are asked to estimate what would happen to the sales of Ford Mustangs as a result of a change in (i) the price of a Chevrolet Camaro, (ii) the price of gasoline, and (iii) consumer incomes. You are given the following elasticities:
Price elasticity of demand for Ford Mustangs = -2.5
Cross-price elasticity between Ford Mustangs and Camaros = 1.5
Cross-price elasticity between Ford Mustangs and gasoline = -0.80
Income elasticity of demand for Ford Mustangs = 3.00
QUESTIONS:
1. Suppose the price of a Camaro falls by 10%. With all else being equal, sales of Ford Mustangs would Rise by __________.
2. If the price of gasoline increases by 20%, the quantity of Ford Mustangs would Fall by ________.
3. If consumer incomes increase by 5%, the quantity of Ford Mustangs would Rise by _________.
Business
1 answer:
nikdorinn [45]3 years ago
3 0

Answer:

Explanation:Part 1). Answer :- Sales of Ford Mustangs will decrease by 15 % (1.5 * 10 %).

Explanation :- Camaro and Ford Mustangs are substitute goods because the cross-price elasticity between Ford Mustangs and Camaro is in positive. Accordingly, with the decrease in price of camaro, the quantity sold of Ford Mustangs will also decrease.

Part 2). Answer :- Quantity of Ford Mustangs will decrease by 16 % (0.80 * 20 %).

Explanation :- Gasoline and Ford Mustangs are complementary goods because the cross-price elasticity between Ford Mustangs and Camaro is in negative. Accordingly, with the increase in price of gasoline, the quantity sold of Ford Mustangs will decrease.

Part 3). Answer :- Quantity of Ford Mustangs will increase by 15 % (3 * 5 %).

Explanation :- With the increase in income of consumer, the demand for normal good also increase. Accordingly, with the increase in consumer's income, quantity demanded of Ford Mustangs will also increase.

You might be interested in
When money serves as a common denominator for measuring the exchange rates among goods and services, it performs as a
Aleks [24]

Answer:

Standard of value.

Explanation:

When money serves as a common denominator for measuring the exchange rates among goods and services, it performs as a standard of value.

Standard of value is an agreed-upon worth for a transaction in a country's medium of exchange, such as the U.S. dollar or Mexican peso. A standard of value allows all merchants and economic entities to set uniform prices for goods and services

4 0
3 years ago
Prompt<br> What should you do after writing something?
finlep [7]

Answer:

revise, edit, cite sources.

Explanation:

8 0
2 years ago
Read 2 more answers
Ben cartwright runs the wild west wax museum in carson city, nevada. the museum has been in business for 40 years and is a major
lawyer [7]

<u>Solution and Explanation:</u>

The implicit cost of capital

Implicit cost of capital is the opportunity cost of capital which is already incurred but not reported as a separate cost/expense, Implicit cost is the cost which results from using an existing asset instead of selling or renting it.

For example when a businessman uses his/her existing land which has implicit cost of say $1000 per month but bought it for say $100 many years ago, so $1000 is its implicit cost/current market rent per month which is equal to its oppo

5 0
3 years ago
M. Bot Corporation has 10,000 shares of 8%, $100 par value, cumulative preferred stock outstanding at December 31, 2022. No divi
Andru [333]

Answer:

$135000

Explanation:

Given: Outstanding cumulative preferred stock of 10000 shares of 8% at $100

            Dividend paid= $375000.

Now, calculating preferred stock.

Preferred stock= (10000 shares\times $100\times 8\%)= \$ 80000

∴ Preferred stock= $80000

Cumulative dividend paid to shareholder= (80000\times 2 + 80000) = \$ 240000.

∴ Cumulative dividend paid to shareholder= $240000

Next, computing the amount of dividends will common stockholder receive.

Total dividend paid= $375000.  

Dividend received by common stockholder= (\textrm {Total dividend paid - cumulative dividend paid})

⇒ Dividend received by common stockholder= (375000-240000)= \$ 135000

∴ $135000 dividend will be received by common stockholder.    

7 0
3 years ago
Wage and price stickiness Select one: a. gives rise to a vertical long-run aggregate supply curve. b. gives rise to a vertical s
Tresset [83]

Answer:

d. prevents the economy from producing its potential level of real GDP.

Explanation:

Price-stickiness or Wage-stickiness, is a term that describes a condition in which a nominal price or wage is resistant to change. Often referred to as Nominal Rigidity, this occurs when a price or wage is fixed in nominal terms for a given period of time.

In other words, Price stickiness or Wage Stickiness occurs when workers' earnings or price don't adjust quickly to changes in labor market conditions, thereby creating sustained periods of shortage or surplus.

Hence, Price and Wage stickiness prevent the economy from achieving its natural level of employment and its potential output, which in turn prevents the economy from producing its potential level of real GDP.

5 0
3 years ago
Other questions:
  • All of the following are services that are available at banks except _____.
    9·1 answer
  • The impact of crowding out
    15·1 answer
  • Intel Corporation had assets equal to $123,249 million and liabilities equal to $54,230 million for a recent year-end. What was
    7·1 answer
  • During the process of confirming receivables as of December 31, Year 1, a positive confirmation was returned indicating the "Bal
    13·1 answer
  • Stanley purchases nonresidential real property costing $300,000 and places it in service in March 2018. What is Stanley's 2019 d
    7·1 answer
  • When Top-Flite introduced its Strata golf balls with a new design for better flight with hit by metal clubs, it charged three ti
    6·1 answer
  • A quasi-public good is: A. a public good that is produced profitably by private firms, without government subsidy. B. one charac
    14·1 answer
  • Question 2 of 25
    15·2 answers
  • An important first step in adapting a product to a foreign market is to determine the Group of answer choices personal ethics of
    7·1 answer
  • A company is about to go public with an ipo loading. (initial public offering) and the company founders keep a significant porti
    14·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!