Simple microeconomics questions - 1. What are some of the factors which affect t

Question

Simple microeconomics questions - 1. What are some of the factors which affect the demand for goods and services?What happens to the demand for a good when each of these factors decreases? 2. Xbox One and Playstation 4 are viewed as substitutes because they are both competing video game systems.Suppose the price of the PS4 falls.What will happen to the supply, demand, market quantity, and the price in the market for Xbox One?Illustrate with a supply and demand model. 3. The market for hotdogs is currently in market equilibrium (Supply = Demand).Using Demand and Supply analysis explain the effects on the market price of hotdogs and the quantity of hotdogs sold if: a. The price of a hamburger rises (substitute good)? b. The prices of a mustard and ketchup rise (compliment goods)? c. The supply of hotdogs increases? d. Consumers’ incomes increase if hot dogs are an inferior good? 4. At the end of the semester, four students list their economic textbooks for sale online. The minimum price that Alex is willing to accept is $20.Caroline wants at least $25.Kira is willing to sell only if the price is higher than $30, and William wants at least $35 for his book.There are four new students needing to buy an economics textbook for their classes next semester.Cole is willing to pay no more than $50.Jacqueline will pay no more than $55, Sienna will pay no more than $60, and Sam will pay any price up to $65.Suppose that each book sells for $40. What is the total Consumer Surplus for this textbook market? What is the total Producer Surplus for this textbook market? Suppose that the price for the text books was $54.How many books will be sold? What happens to the size of the Consumer Surplus? What happens to the size of the Producer Surplus? What is the source of the Dead Weight Loss? 5. Why do economists generally oppose government price controls?

Explanation / Answer

Q1

Ans:

Following factors affect the demand

1. Income:

Change in income affect on demand: Increase in income increase demand of goods and vice versa if the good is normal .

2. Price:

Change in price affect demand in negative direction.

3. Consumer preferences

As the preferences changes the demand affects.

4. Advertising :

It changges preferences and that affects demand. Increase advertising increase in demand. a positive relationship.

5. Expected price:

the consumer get to know that future price will increase then the demand in present increases and vice versa.

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