Refer to Scenario 5 . Calculate the price elasticity of demand ...

[burton19126]

Refer to Scenario 5 . Calculate the price elasticity of demand for DVD players. Is demand for players elastic, inelastic, or unitary?
 
  What will be an ideal response?

Question 2

The above figure represents the market for teenage workers at fast-food restaurants in Kansas City.
 
  a) What is the equilibrium wage rate and employment?
  b) Describe the market at a wage rate of 6 per hour.
  c) Describe the market at a wage rate of 12 an hour.
  d) How would an increase in the number of young, married college graduates, who tend to eat at fast-food restaurants, affect the figure, the equilibrium wage rate, and employment?

[raenoj]

Answer to Question 1

Percentage change in quantity demanded is 1.24 . Percentage change in price is -0.67 . The price elasticity of demand for DVD players is 1.86 or relatively elastic.

Answer to Question 2

a) The equilibrium wage rate is 8 an hour and the equilibrium quantity of employment is 4,000 workers.
b) If the wage rate is 6 an hour, the quantity of labor supplied is less than the quantity of labor demanded. There is a shortage in the market.
c) If the wage rate is 12 an hour, the quantity of labor supplied is greater than the quantity of labor demanded. There is a surplus in the market.
d) An increase in the number of people who eat in fast-food restaurants will increase the demand for workers at fast-food restaurants. As a result the demand for labor curve will shift rightward and the equilibrium wage rate and equilibrium quantity of employment will both increase.

[burton19126]

Thank you

[raenoj]

No problemo