Question: Recall that when demand is perfectly inelastic, Q, P = 0. a) Sketch a graph of a perfectly inelastic demand curve. b) Suppose the supply

Recall that when demand is perfectly inelastic, εQ, P = 0.
a) Sketch a graph of a perfectly inelastic demand curve.
b) Suppose the supply of 1961 Roger Maris baseball cards is perfectly inelastic. Suppose, too, that renewed interest in Maris's career caused by Mark McGwire and Sammy Sosa's quest to break his home run record in 1998 caused the demand for 1961 Maris cards to go up. What will happen to the equilibrium price? What will happen to the equilibrium quantity of Maris baseball cards bought and sold?

Step by Step Solution

★★★★★

3.31 Rating (177 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

a A perfectly inelastic demand curve will be vertical b ... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

846-B-E-D-S (1996).docx

120 KBs Word File

Students Have Also Explored These Related Economics Questions!

In general, if the price of the underlying stock is going up, what will happen to the price of a put option? Briefly explain.

Consider a country that imports a good from abroad. For each of following statements, say whether it is true or false. Explain your answer. a. The greater the elasticity of demand, the greater the...

1. Fill in the blanks in the following table. Note that the ordering of the first column has been scrambled. 2. When _____ (supply/demand) changes, the equilibrium price and the equilibrium quantity...

2.12. Recall that when demand is perfectly inelastic, !Q, P ! 0. a) Sketch a graph of a perfectly inelastic demand curve. b) Suppose the supply of 1961 Roger Maris baseball cards is perfectly...

Explain clearly Question 2 You have the utility function U(q192) = q; q; . Suppose p1 = 1, P2 =10. When you have a budget of 600 yuan, your optimal bundle 91 = 0 20 0 400 0 40 200 0 0 100 none of the...

Economics: Elasticity Explain shortly. Please do correctly and take your time. There is a written question at the bottom. There are total thirty one MC and one written. 1. What is the effect on total...

Elasticity and Total Revenue: For a producer, the elasticity of demand for a product is very important for them to know when they are trying to decide on a price. If a product has an inelastic...

What information does this elasticity coefficient give? When average income increases from $5000 to $8000, the quantity of automobiles demanded increases from 100 000 to 120 000. Price per Quantity...

10. Suppose there are 1000 identical rms producing heads oflettuce in a perfectly competitive market and that the total cost curve for each rm is given by TC=q2 + 4:; + 20 and MC = q+4. a. Write an...

Elasticity and the Nash Equilibrium Part A 1. The quantity of a good demanded rises from 1000 to 1500 units when the price falls from $1.50 to $1.00 per unit. The price elasticity of demand for this...

An investor borrowed 336263 PLN. The loan was for 6 months at 12% annual interest (compound interest rate, equal total payments). Create a loan amortization schedule if the investor pays two payments...

W has recently completed the development and testing of a new product which has cost S400,000. It has also bought a machine to produce the new product costing S150,000. The production machine is...

What does a higher bond duration indicate? Higher sensitivity to changes in interest rates Lower sensitivity to changes in interest rates Higher risk of default Lower risk of default

2.55 To find the first and third quartiles Q1 and Q3 for grouped data, we proceed as in Exercise 2.53, but count n 4 and 3 n 4 of the observations instead of n 2 . (a) With reference to the...

Discuss the likely effects of the following: a. Rent ceilings on the market for apartments b. Floors under wheat prices on the market for wheat Use supply-demand diagrams to show what may happen in...

U.S. government price supports for milk led to an unceasing surplus of milk. In an effort to reduce the surplus about a decade ago, Congress offered to pay dairy farmers to slaughter cows. Use two...

In 1981, when regulations were holding the price of natural gas below its free-market level, then-Congressman Jack Kemp of New York said the following in an interview with the New York Times: We need...

Ida Company produces a handcrafted musical instrument called a gamelan that is similar to a xylophone. The gamelans are sold for \$879. Selected data for the company's operations last year follow:...

How Many Apps for Your Smartphone? A random sample ofn = 461 smartphone users in the US in January 2015 found that 355 of them have downloaded an app. 1 Of then = 355 smartphone users who had...

Type your question h 10. Consider the following balance sheet: Cash $ 70,000Accounts payable $ 30,000 Accounts receivable 30,000Long-term debt 20,000 Inventories 50,000Common stock 200,000 Net fixed...