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stats problems with solution fall 2014




Question;1. Suppose the data in the table below represents the price of a base model hybrid automobileand the quantity of that model sold for 3 years.a. Do these data indicate that the demand curve for this hybrid automobile is upwardsloping? Why or why not?YearPriceQuantity2008$24,88035,2652009$24,55033,2502010$25,25036,4662. The market for autographs by a superstar baseball player during the 1950s and 1960sindicates that while the player?s autograph is not rare it remains highly desirable and ofrelatively high price to collectors. In fact, a baseball signed by this superstar player is likelyto sell for twice the price of baseballs signed by a teammate whose autograph is relativelyrare.a. Use one graph to show both the demand and supply for autographs by the superstarand the demand and supply for autographs by the teammate and label the equilibriumpoint for both supply/demand curves.b. How it is possible for the price of the superstar?s autographs to be higher than theprice of the teammate?s autographs even though the supply of superstar autographs islarger than the supply of teammate autographs? How does the graph display thisinformation?3. Assume that the demand for ethanol, a corn-based alternative fuel, decreases. As a result,ethanol producers petition the Environmental Protection Agency (EPA) to raise the allowableamount of ethanol in gasoline blends from 10 percent to 15 percent.a. Draw and accurately label the graph that reflects market for corn.b. Draw and accurately label the graph that reflects market for tortillas.c. If the EPA were to agree to the proposal to increase the amount of ethanol inblends from 10 percent to 15 percent, what would be the effect on the price oftortillas, also a corn-based product?4. Assume that the demand for Internet advertising is declining at the same time that thenumber of Internet sites accepting advertising is increasing. From this information, a studentargues that that the price of Internet ads should fall, but it is not known whether the totalquantity of Internet ads will increase or decrease.a. Assume the equilibrium price of Internet advertisements is initially P1 and theequilibrium quantity is Q1, draw and properly label a graph that reflects thissituation.b. Draw and properly label a new supply curve for Internet advertisements (S2) and anew demand curve for advertisements (D2).c. Explain your graphs as they relate to the student?s analysis. Is the student correct?Why or why not?5. The notion of rent controls can be somewhat controversial.a. What is the economic rationale for a city to enact rent controls?b. What are a few unintended consequences of rent controls in large cities? Bespecific.c. Is it more likely that a tenant will be ?blacklisted? in a city with rent control orone without rent control? Explain.6. Many factors affect the supply and demand of carbonated sodas.a. Draw and accurately label a graph that shows a decrease in the supply of sodas tothe market, you must accurately label the graph.b. Draw and accurately label a graph that shows a drop in the average householdincome in the United States from $42,000 to $41,000.c. Draw and accurately label a graph that shows an improvement in the soda makingtechnology.d. Draw and accurately label a graph that shows an increase in the price of highfructose corn syrup (the sugar used in sodas). Under what economiccircumstances should soda producers switch back to using cane sugar? Are thereany other managerial consequences to this question?e. What are the two most significant unintended economic consequences of adecrease in the supply of sodas?f. If you were seated on a cross-country flight next to the CEO of a major sodabottler who mentioned the troubling economic news of average family incomesfalling, what would be your response? Include both short term and long-termupsides and downsides to the issue.


Paper#61611 | Written in 18-Jul-2015

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