Trident eco201 module 2 case

| September 28, 2018

Case Assignment
Write a
4- to 5-page essay that addresses the following FOUR questions on the market
for milk. (For this Case, keep it simple; don’t worry about different brands,
etc.)

Explain what happens
to price and quantity of milk when the following events
occur (you do not need to analyze the event itself but
rather determine the effect of the event on supply and demand of milk):

A scientific study shows
that consumption of milk is beneficial for healthy bones.
There is an outbreak of mad
cow disease.
The price of almond milk
decreases.
In order to promote healthy
families, a price ceiling on milk is implemented.

Suppose Johnny drinks 4 cups
of milk every day no matter what the price. What kind of elasticity does
it have?
Suppose that when the price
of milk increases by 40%, the percentage change in quantity demanded by
consumer is reduced by 10%. Calculate the elasticity.
Based on your answer to
Question 3, What happens to total revenue when the price of milk is
increased. Why?

Some
helpful suggestions on completing the assignment:
For each
event, you must specify how it effects either demand, quantity demanded,
supply, or quantity supplied. It is also important to demonstrate how the
change will affect the market demand or supply curve. Also, be sure to state
any assumption you are making regarding the relationship of the event and milk.
Here is
an example of the best way to answer question #1 above:
Event:
Price of cereal decreases.
Assume
that cereal is a complement for complement. If cereal is cheaper, then the
consumer will increase quantity demanded of cereal. If consumers buy more
cereal, then there will be an increased demand for milk because it is its
complement. This event causes a shift of the demand curve to the right. The
shift will cause price and quantity of milk to increase.
Here is
also some helpful information on how to address the elasticity questions:
Inelastic
goods (goods in which consumers are less responsive to changes in price):
e < |-1| Elastic goods (goods in which consumers are more responsive to changes in price): e >
|-1|
In this
course, we use the absolute value of elasticity. The price elasticity of demand
is always calculated as a negative value due to the law of demand (inverse
relationship between price and quantity).
Assignment Expectations
Use
concepts from the modular background readings as well as any good-quality
resources you can find. Be sure to cite all sources within the text and provide
a reference list at the end of the paper.
Length:
4–5 pages double-spaced and typed.
The
following items will be assessed in particular:

Your ability to understand
an application of supply and demand.
Some in-text references to
the modular background material (APA formatting not required).
The essay should address
each element of the assignment. Remember to support your answers with
solid references including the Case readings.

Upload
your paper to the Case 2 dropbox when it is completed.

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