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What Is The Estimated Impact On Demand For Fresh Fish

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Problem 1: The Law of Demand states: “The quantity demanded for a product in a given time period will increase as its price falls, ceteris paribus.” Yet for some producers (such as gasoline retailers) when the price decreases….revenues also decrease. Explain this seemingly contradictory outcome.
The Law of Demand is centered on all goods and services. When you look at producers such as gasoline retailers there are many factors that affect the demand and supply. When gasoline prices decrease their revenue decreases too mostly due to the price level in the economy. The gas quality of gasoline purchased increased and the prices increase by 10%. Nevertheless, if we look at the prices of other goods and services increase by 20%, we can see that …show more content…

Fully explain your answer.
I think that a cruise vacation would have a higher price elasticity of demand because it’s considered a luxury and most can do without it. However, milk is considered a necessity and most Americans need it for survival to life.
Problem 3: Refer to Table 4.1 in the textbook. Assume these estimates are current and accurate. If the price for fresh fish decreases 20%, what is the estimated impact on demand for fresh fish? Quantify your answer. Show your work.
10%/ 20%= -0.5; The price of 20% goes up and the demand decreases by …show more content…

As price drops from $100 to $75, is the demand elastic or inelastic? Show your work or reasoning.
As the price drops from $100 to $75, the quantity rises from 20 to 25. The demand is considered elastic.
Work: -25/20= -1.25

Problem 5: Advertisers successfully convince twice as many people to purchase portable DVD players.
a.Redraw the demand curve.
I doubled the quantity demand from the graph used above.
Price Quantity Demanded
$150 20 $125 30
$100 40 $75 50
$50 60

b. Now how much will all consumers spend per month on portable DVD players (monthly total sales) at a price of $100?
If consumers $100 a month on DVD players, they will spend about $2000
Work: $100*40= $4,000
c.As price drops from $100 to $75, how does elasticity compare to problem 5 (above)? Why?
As the price drops from $100 to $75, the quantity rises from 50 to 40. The demand is considered inelastic. Due to the price of the goods not changing but the demand increasing, then the demand curve changed and became more steep.
Work: -40/50= -0.8

Problem 6: Complete the following cost function/table. What is the value of fixed cost?
Rate of Output Total Cost Marginal Cost= (TC2-TC1) Average Total Cost =(TC/Q)
0 $500 0 0
1 $550 551 550
2 $650 324 325
3 $840 278 280
4 $1100 272 275
5 $1500 296

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