QUESTION 01: Explain the concepts of Demand, supply and market equilibrium. Give real life examples to explain the shift in demand and supply and also explain the impact of a shift in demand or supply or both on the equilibrium price and quantity. (use appropriate diagrams)

QUESTION 02: Discuss the concept of Price Elasticity of Demand. Explain using suitable examples the various determinants of Price Elasticity of Demand.

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Jamar FerryLv2

31 Jan 2019

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QUESTION 01: Discuss the concept of Price Elasticity of Demand. Explain using suitable examples the various determinants of Price Elasticity of Demand.

QUESTION 02: Explain the concept of Monopolistic competition. Give an example of product/service which falls under this type of market structure and explain the basis of product differentiation for your chosen product/ service.

Explain the relationship between the price elasticity of demand and total revenue. What are the impacts of various forms of elasticities (elastic, inelastic, unit elastic, etc.) on business decisions and strategies to maximize profit? Explain using empirical examples.

Is the price elasticity of demand or supply more elastic over a shorter or a longer period of time? Why? Give examples.

What are the impacts of government and market imperfections (failures) on the price elasticities of demand and supply?

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A. Think about a product that you have purchased recently (e.g. soda, diapers, takeout meals, milk, shoes, manicure/pedicure, video game, etc.). Explain how the law of demand affected your purchase. Give specific examples of how the determinants of demand and supply affect this product (T-I-P-E-N and P-R-E-S-T). What happens to the demand curve and the supply curve when any of these determinants change? Give examples of scenarios that would cause a change in demand versus a movement along the same demand curve and supply curve for this product. Discuss the new equilibrium price and quantity that result from these changes. Can you demonstrate some of these changes graphically?

B. For your selected product, if the government places a mandated price ABOVE the equilibrium price, how would this affect the market equilibrium?

C. Would you rather have the forces of demand and supply determine the price of gasoline, or would you prefer a government-mandated price ceiling? What problems would a price ceiling on gasoline bring in this market?