经济学原理chapter 5.docx

经济学原理chapter 5.docx

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经济学原理chapter5

；ProblemsandApplications

1.a.Mysterynovelshavemoreelasticdemandthanrequiredtextbooks,becausemysterynovelshaveclosesubstitutesandarealuxurygood,whilerequiredtextbooksareanecessitywithnoclosesubstitutes.Ifthepriceofmysterynovelsweretorise,readerscouldsubstituteothertypesofnovels,orbuyfewernovelsaltogether.Butifthepriceofrequiredtextbooksweretorise,studentswouldhavelittlechoicebuttopaythehigherprice.Thusthequantitydemandedofrequiredtextbooksislessresponsivetopricethanthequantitydemandedofmysterynovels.

b.Beethovenrecordingshavemoreelasticdemandthanclassicalmusicrecordingsingeneral.Beethovenrecordingsareanarrowermarketthanclassicalmusicrecordings,soit’seasytofindclosesubstitutesforthem.IfthepriceofBeethovenrecordingsweretorise,peoplecouldsubstituteotherclassicalrecordings,likeMozart.Butifthepriceofallclassicalrecordingsweretorise,substitutionwouldbemoredifficult（atransitionfromclassicalmusictorapisunlikely!

）.ThusthequantitydemandedofclassicalrecordingsislessresponsivetopricethanthequantitydemandedofBeethovenrecordings.

c.Heatingoilduringthenextfiveyearshasmoreelasticdemandthanheatingoilduringthenextsixmonths.Goodshaveamoreelasticdemandoverlongertimehorizons.Ifthepriceofheatingoilweretorisetemporarily,consumerscouldn’tswitchtoothersourcesoffuelwithoutgreatexpense.Butifthepriceofheatingoilweretobehighforalongtime,peoplewouldgraduallyswitchtogasorelectricheat.Asaresult,thequantitydemandedofheatingoilduringthenextsixmonthsislessresponsivetopricethanthequantitydemandedofheatingoilduringthenextfiveyears.

d.Rootbeerhasmoreelasticdemandthanwater.Rootbeerisaluxurywithclosesubstitutes,whilewaterisanecessitywithnoclosesubstitutes.Ifthepriceofwaterweretorise,consumershavelittlechoicebuttopaythehigherprice.Butifthepriceofrootbeerweretorise,consumerscouldeasilyswitchtoothersodas.Sothequantitydemandedofrootbeerismoreresponsivetopricethanthequantitydemandedofwater.

2.a.Forbusinesstravelers,thepriceelasticityofdemandwhenthepriceofticketsrisesfrom$200to$250is[（2,000-1,900）/1,950]/[（250-200）/225]=3/13=0.23.Forvacationers,thepriceelasticityofdemandwhenthepriceofticketsrisesfrom$200to$250is[（800-600）/700]/[（250-200）/225]=9/7=1.29.

b.Thepriceelasticityofdemandforvacationersishigherthantheelasticityforbusinesstravelersbecausevacationerscanmoreeasilychooseadifferentmodeoftransportation（likedrivingortakingthetrain）.Businesstravelersarelesslikelytodososincetimeismoreimportanttothemandtheirschedulesarelessadaptable.

3.a.Ifyourincomeis$10,000,yourpriceelasticityofdemandasthepriceofcompactdiscsrisesfrom$8to$10is[（40-32）/36]/[（10-8）/9]=1.Ifyourincomeis$12,000,theelasticityis[（50-45）/47.5]/[（10-8）/9]=9/19=0.47.

b.Ifthepriceis$12,yourincomeelasticityofdemandasyourincomeincreasesfrom$10,000to$12,000is[（30-24）/27]/[（12,000-10,000）/11,000]=11/9=1.22.Ifthepriceis$16,yourincomeelasticityofdemandasyourincomeincreasesfrom$10,000to$12,000is[（12-8）/10]/[（12,000-10,000）/11,000]=11/5=2.2.

4.a.IfEmilyalwaysspendsone-thirdofherincomeonclothing,thenherincomeelasticityofdemandisone,sincemaintainingherclothingexpendituresasaconstantfractionofherincomemeansthepercentagechangeinherquantityofclothingmustequalherpercentagechangeinincome.Forexample,supposethepriceofclothingis$30,herincomeis$9,000,andshepurchases100clothingitems.Ifherincomerose10percentto$9,900,she’dspendatotalof$3,300onclothing,whichis110clothingitems,a10percentincrease.

b.Emily’spriceelasticityofclothingdemandisalsoone,sinceeverypercentagepointincreaseinthepriceofclothingwouldleadhertoreduceherquantitypurchasedbythesamepercentage.Again,supposethepriceofclothingis$30,herincomeis$9,000,andshepurchases100clothingitems.Ifthepriceofclothingrose1percentto$30.30,shewouldpurchase99clothingitems,a1percentreduction.[Note:

Thispartoftheproblemcanbeconfusingtostudentsiftheyhaveanexamplewithalargerpercentagechangeandtheyusethepointelasticity.Onlyforasmallpercentagechangewilltheanswerworkwithanelasticityofone.Alternatively,theycangetthesecondpartiftheyusethemidpointmethodforanysizechange.]

c.SinceEmilyspendsasmallerproportionofherincomeonclothing,thenforanygivenprice,herquantitydemandedwillbelower.Thusherdemandcurvehasshiftedtotheleft.Butbecauseshe’llagainspendaconstantfractionofherincomeonclothing,herincomeandpriceelasticitiesofdemandremainone.

5.a.Witha4.3percentdeclineinquantityfollowinga20percentincreaseinprice,thepriceelasticityofdemandisonly4.3/20=0.215,whichisfairlyinelastic.

b.Withinelasticdemand,theTransitAuthority’srevenueriseswhenthefarerises.

c.Theelasticityestimatemightbeunreliablebecauseit’sonlythefirstmonthafterthefareincrease.Astimegoesby,peoplemayswitchtoothermeansoftransportationinresponsetothepriceincrease.Sotheelasticitymaybelargerinthelongrunthanitisintheshortrun.

6.Tom’spriceelasticityofdemandiszero,sincehewantsthesamequantityregardlessoftheprice.Jerry’spriceelasticityofdemandisone,sincehespendsthesameamountongas,nomatterwhattheprice,whichmeanshispercentagechangeinquantity,isequaltothepercentagechangeinprice.

7.Toexplainthefactthatspendingonrestaurantmealsdeclinesmoreduringeconomicdownturnsthandoesspendingonfoodtobeeatenathome,economistslookattheincomeelasticityofdemand.Ineconomicdownturns,peoplehavelowerincome.Toexplainthefact,theincomeelasticityofrestaurantmealsmustbelargerthantheincomeelasticityofspendingonfoodtobeeatenathome.

8.a.Withapriceelasticityofdemandof0.4,reducingthequantitydemandedofcigarettesby20percentrequiresa50percentincreaseinprice,since20/50=0.4.Withthepriceofcigarettescurrently$2,thiswouldrequireanincreaseinthepriceto$3.33apackusingthemidpointmethod（notethat（$3.33-$2）/$2.67=.50）.

b.Thepolicywillhavealargereffectfiveyearsfromnowthanitdoesoneyearfromnow.Theelasticityislargerinthelongrun,sinceitmaytakesometimeforpeopletoreducetheircigaretteusage.Thehabitofsmokingishardtobreakintheshortrun.

c.Sinceteenagersdon’thaveasmuchincomeasadults,theyarelikelytohaveahigherpriceelasticityofdemand.Also,adultsaremorelikelytobeaddictedtocigarettes,makingitmoredifficulttoreducetheirquantitydemandedinresponsetoahigherprice.

9.You’dexpectthepriceelasticityofdemandtobehigherinthemarketforvanillaicecreamthanforallicecreambecausevanillaicecreamisanarrowercategoryandotherflavorsoficecreamarealmostperfectsubstitutesforvanilla.

You’dexpectthepriceelasticityofsupplytobelargerforvanillaicecreamthanforallicecream.Aproducerofvanillaicecreamcouldeasilyadjustthequantityofvanillaicecreamandproduceothertypesoficecream.Butaproduceroficecreamwouldhaveamoredifficulttimeadjustingtheoverallquantityoficecream.

10.a.AsFigure5-2shows,inbothmarkets,the了，increaseinsupplyreducestheequilibriumpriceandincreasestheequilibriumquantity.

b.Inthemarketforpharmaceuticaldrugs,withinelasticdemand,theincreaseinsupplyleadstoarelativelylargedeclineinthepriceandnotmuchofanincreaseinquantity.

Figure5-2

c.Inthemarketforcomputers,withelasticdemand,theincreaseinsupplyleadstoarelativelylargeincreaseinquantityandnotmuchofadeclineinprice.

b.Inthemarketforpharmaceuticaldrugs,sincedemandisinelastic,thepercentageincreaseinquantitywillbelessthanthepercentagedecreaseinprice,sototalconsumerspendingwilldecline.Incontrast,sincedemandiselasticinthemarketforcomputers,thepercentageincreaseinquantitywillbegreaterthanthepercentagedecreaseinprice,sototalconsumerspendingwillincrease.

11.a.AsFigure5-3shows,inbothmarkets,theincreaseindemandincreasesboththeequilibriumpriceandtheequilibriumquantity.

b.Inthemarketforbeachfrontresorts,withinelasticsupply,theincreaseindemandleadstoarelativelylargeincreaseinthepriceandnotmuchofanincreaseinquantity.

c.Inthemarketforautomobiles,withelasticsupply,theincreaseindemandleadstoarelativelylargeincreaseinquantityandnotmuchofanincreaseinprice.

d.Inbothmarkets,totalconsumerspendingrises,sincebothequilibriumpriceandequilibriumquantityrise.

Figure5-3

12.a.Farmerswhosecropsweren’tdestroyedbenefitedbecausethedestructionofsomeofthecropsreducedthesupply,causingtheequilibriumpricetorise.

b.Totellwhetherfarmersasagroupwerehurtorhelpedbythefloods,you’dneedtoknowthepriceelasticityofdemand.Itcouldbethattheadditionalincomeearnedbyfarmerswhosecropsweren’tdestroyedrosemorebecauseofthehigherpricesthanfarmerswhosecropsweredestroyed,ifdemandisinelastic.

13.Aworldwidedroughtcouldincreasethetotalrevenueoffarmersifthepriceelasticityofdemandforgrainisinelastic.Thedroughtreducesthesupplyofgrain,butifdemandisinelastic,thereductionof