Micro Hw1

Homework number 1 task 1 At this graph we do-nothing see that the choose pervert D and supply reduce S crosses each-other at point A0 which is the market place sense of balance. The vertical axis P shows the terms of the drug, and the naiant axis shows the step demanded Q. P0 shows the counterbalance impairment, and Q0 shows the equilibrium quantity. At the coterminous graph we faeces stigmatize that after raft rise up out about the emplacement answer, they go forth system to buy less of this drug since it is a bad situation effect. In this solecism since the side effect is an outside ingredient it volition shift the demand curve D to the left. Because of this shift now we will have a refreshful equilibrium point A1 in which the quantity demanded Q1 will be microscopicaler and the bleak outlay P1 will be also smaller. At the new equilibrium price since the price is smaller also the quantity supplied will be smaller. Pro blem 2 We whap that the price elasticity of demand is wedge by four important factors which are: 1-Necessity vs. Luxury 2-Percentage transport in income 3- handiness of substitutes 4-Time factor If the scheme wants to be successful in cosmetic surgery evidentiary levy revenues it has to find thoroughlys that have an inelastic price of demand.

In this case people would mum have to buy the good, and the change in demand would be very small since it has a small price elasticity of demand. One good ignore be drugs. The price elasticity of demand of this good is impacted by the first listed factor: Necessity vs. Luxury. We all know that drugs are a necessity when people g et disgorge or have health problems, so eve! n if government puts a higher tax on this good still people will have to buy them, and the quantity change will decrease very little. Another good can be used from the government if it wants to be successful in raising significant tax revenues is caffeine. The price elasticity of demand of this good is impacted by the third listed factor: Availability of substitutes. If the price of caffeine were to go up...If you want to get a secure essay, order it on our website: OrderEssay.net

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