Explain briefly three important reasons why firms have sticky prices in the short run. Given an example of a price that is sticky in the short run but flexible in the long run.
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Explain briefly three important reasons why firms have sticky prices in the short run. Given an example of a price that is sticky in the short run but flexible in the long run.
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- Enumerate the factors that affect a static supply schedule and explain themExplain why demand policies can only reduce unemployment below the natural rate in the short-run.In the short run, the quantity of output that firms supply can deviate from the natural level of output if the actual price level in the economy deviates from the expected price level. Several theories explain how this might happen. For example, the misperceptions theory asserts that changes in the price level can temporarily mislead firms about what is happening to their output prices. Consider a soybean farmer who expects a price level of 100 in the coming year. If the actual price level turns out to be 90, soybean prices will(FALL, RISE, OR REMAIN THE SAME) , and if the farmer mistakenly assumes that the price of soybeans declined relative to other prices of goods and services, she will respond by (REDUCING OR INCREASING) the quantity of soybeans supplied. If other producers in this economy mistake changes in the price level for changes in their relative prices, the unexpected decrease in the price level causes the quantity of output supplied to (RISE ABOVE OR FALL BELOW)…
- In the short run, the quantity of output that firms supply can deviate from the natural level of output if the actual price level in the economy deviates from the expected price level. Several theories explain how this might happen. For example, the misperceptions theory asserts that changes in the price level can temporarily mislead firms about what is happening to their output prices. Consider a soybean farmer who expects a price level of 100 in the coming year. If the actual price level turns out to be 90, soybean prices will and if the farmer mistakenly assumes that the price of soybeans declined relative to other prices of goods and services, she will respond by the quantity of soybeans supplied. If other producers in this economy mistake changes in the price level for changes in their relative prices, the unexpected decrease in the price level causes the quantity of output supplied to the natural level of output in the short run.Explain why business demand is considered a derived demand. Provide an example.Carefully explain what is happening in the following markets. Indicate the impact if any on demand,supply,price and quantity. Choose answer from the following ; no impact, excess supply,shift inwards to left,increase equilibrium price,shift outwards to right, decrease equilibrium quantity,increase towards equilibrium,increase equilibrium quantity, decrease towards equilibrium, change in quantity uncertain, excess demand,decrease equilibrium,change in price uncertain 1d) Electricity is a major input the production of aluminum,and aluminum is substitute in supply for steal ,the effect of an increase in price of electricity.
- Price A B D $1 C D1 S2 D2 Quantity per period Refer to the above graph to answer this question. How could you describe the movement from point D to point A? Select one: A. A decrease in supply which leads to a decrease in the equilibrium price a decrease in demand. B. A decrease in demand which leads to an increase in the equilibrium price and a decrease in supply. C. A decrease in demand which leads to an increase in the equilibrium price and a decrease in the quantity supplied. O D. A decrease in supply which leads to an increase in the equilibrium price and a decrease in demand. O E. A decrease in supply which leads to an increase in the equilibrium price and a decrease in quantity demanded.Write down the factors affecting supply. Which of the following factors will cause the following products to increase or decrease? Crude oil Beef Hotel rooms Fast food outlets Credit cards issued by financial institutions Laptop computersWhy does the collective behaviour of supply managers have such an impact on economic trends?
- Agis Homes is one of the largest builders of new homes in the U.S. As the economist for Agis Homes, you have forecast the following for the year 2022: The price of lumber used to construct homes will increase by 25% The economy will come roaring back and personal income will increase by close to 10% Assume that the prices of new homes are determined by supply and demand. Assuming everything else is held constant: If both of these impacts occur at the same time, what do you expect to happen to the equilibrium price and quantity of new homes? Use demand and supply analysis to help explain your answer.Read each article linked below and summarize the implications of the events being discussed using the tools of supply and demand. Identify the following: • What has changed or is expected to change? • Explain how the supply curve and/or the demand curve are affected by the change(s)? • What would you expect to be the impact on the price and quantity? You should illustrate your answer with a diagram. Be sure to give each diagram a title, and to label the axis and curves in your diagram. Text of the article America is in love with avocados. The country's appetite for the creamy versatile fruit (yes, avocados are fruit) has grown just about every year for the past 15 years, according to data from the Hass Avocado Board, invadingkitchens and menus across the country. The rise is such that sales of Hass avocados, which make up more than 95 percent of all avocados consumed in the United States, soared to a record of nearly 1.9 billion pounds (or some 4.25 billion avocados) last year, more…Discuss clearly how the following items may affects the change in demand. Population change Prices of related goods Expected future prices, income, and credit
