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1. Why do economists build models?

2. What is a market-clearing model? When is it appropriate to assume when markets clear?

3. Use the model of supply and demand to explain how a fall in the price of a frozen yogurt would affect the price of ice cream and the quantity of ice cream sold. In your explanation , identify the exogenous and endogenous variables?

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Retselisitsoe Pokothoane
Retselisitsoe PokothoaneLv10
21 Jan 2021

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Related questions

Use the model of supply and demand to explain how an increase in the price of ice-cream would affect the price of frozen yogurt and the quantity of ice cream sold. In your explanation, identify the exogenous and endogenous variables. Draw the demand and supply functions of both goods and explain the process.

Suppose that most consumers consider ice cream and frozen yogurt to be substitutes for one another. How is the market for ice cream affected by an increase in the price of frozen yogurt?

     
   

A) The supply of ice cream decreases.
   

B) The demand for ice cream increases.
   

C) The quantity of ice cream supplied decreases.

Question 1: Assume we are given a demand schedule that is represented by P = 200 - 5Q and a supply schedule where P = 110 + 10Q, where P = Price and Q = Quantity. What are the equilibrium price and quantity (show all of your work)?

Question 2: Dairies make low-fat milk from full-cream milk. In the process of making low-fat milk, dairies produce cream, which in turn makes ice cream. In the market for low-fat milk, the following events occur:

a) The wage of dairy worker rises

b) The price of cream rises

c) The price of low-fat milk rises

d) A new technology lowers the cost of producing ice cream

e) Dairy farmers switch some of the production of full-cream to vegetables, based on input from health research studies.

Explain the effects of each of the above events on the supply of low-fat milk.

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