1. Suppose this is the market demand curve of eye glasses. Respond to each following scenario about...

Question

1. Suppose this is the market demand curve of eye glasses. Respond to each following scenario about how the demand (or quantity demanded) may change. You need to post one of the figures copied from the study material file for each question and briefly explain it in your own words. (40%) a. The price of eye-glasses goes up. b. The price of eye-glasses goes down. c. The price of contact lens goes up. d. The price of contact lens goes down. e. An increase in the income of consumers. f. A decrease in the income of consumers. g. A successful advertisement that promotes a fashion to wear glasses. h. A news shows that more and more people who wear contact lenses cause keratitis. 2. In the week 2 summary slides, we discussed “consumer surplus” based on a market demand curve. Now let’s think about the consumer surplus from an individual demand curve. You want to buy a box of Vitamin C and this is your demand curve for this product. (Unit of quantity: box.) (40%) a. If the price is $20, how many boxes do you buy? If the price is $15, how many boxes do you buy? b. If the price is $10, how many boxes do you buy? Is there any consumer surplus for this transaction? Why? c. Suppose the price is $20 and there is a promotion that buy 1 get the 2nd five dollars off and get the 3rd ten dollars off. How many boxes of Vitamin C do you buy based on this demand curve? Is there any consumer surplus for this transaction? Why? From (c), what do you think of the merchant’
	
Document Preview: Suppose this is the market demand curve of eye glasses. Respond to each following scenario about how the demand (or quantity demanded) may change.  You need to post one of the figures copied from the study material file for each question and briefly explain it in your own words. (40%)The price of eye-glasses goes up.The price of eye-glasses goes down.The price of contact lens goes up.The price of contact lens goes down.An increase in the income of consumers.A decrease in the income of consumers.A successful advertisement that promotes a fashion to wear glasses.A news shows that more and more people who wear contact lenses cause keratitis.In the week 2 summary slides, we discussed “consumer surplus” based on a market demand curve. Now let’s think about the consumer surplus from an individual demand curve. You want to buy a box of Vitamin C and this is your demand curve for this product. (Unit of quantity: box.) (40%)If the price is $20, how many boxes do you buy? If the price is $15, how many boxes do you buy?If the price is $10, how many boxes do you buy? Is there any consumer surplus for this transaction? Why?Suppose the price is $20 and there is a promotion that buy 1 get the 2nd five dollars off and get the 3rd ten dollars off.  How many boxes of Vitamin C do you buy based on this demand curve? Is there any consumer surplus for this transaction? Why?From (c), what do you think of the merchant’s idea of the pricing strategy for this promotion?Compare the own-price elasticity of the demand for the medical services below. Discuss which one is the most elastic and which one is the least elastic. Provide your explanation. (no more than one page) (20%)Knee replacement to ease the discomfort by aging jointsLife threating event and sent to emergency departmentFlu shot vaccination

Robert · Accepted Answer

Q.1     Price elasticity demand curve of eye-glasses
 a) As the price of eye-glasses goes up, the quantity demanded will go down or it will reduce.
b) From the figure, as the price of eye-glasses goes down, the quantity demanded will increase 
as there is inverse relation between the price and the quantity demanded of a demand curve.
c) Contact lenses and eye-glasses are substitute goods. So if there is a change in the price of one 
good that will affect the quantity demanded of the other good. Here, if there is a rise in the 
price of contact lenses then the demand of the substitute good will also increase. Therefore, 
there will be a rise in the quantity demanded of the eye-glasses and it will lead to an upward 
shift of the demand curve of eye-glasses.
d) So if the price of contact lens goes down, the quantity demanded of eye-glasses will also go 
down as the contact lenses and eye-glasses are substitute goods. It will be a downward shift in 
the demand curve of eye-glasses.
e) An increase in the income will enable people to buy more goods. So when there is an increase 
in the income there will be an increase in the quantity demanded as well. This could be shown 
on the demand curve as an upward shift in the demand curve.

1. Suppose this is the market demand curve of eye glasses. Respond to each following scenario about how the demand (or quantity demanded) may change. You need to post one of the figures copied from...

Solution

Answer To This Question Is Available To Download

Related Questions & Answers

Submit New Assignment