The Industry Analysts Have Long Recognized That There Is a High

question 44

Essay

The industry analysts have long recognized that there is a high degree of complementarity between automobile tires and gasoline. A recent study done by an automobile industry trade group estimated the following supply and demand functions:
Q_D^T = 5,250,000 - 12,500P^T - 750,000P^G
Q_S^T = -350,000 + 11,750P^T
Q_D^G = 80,500,000 - 30,000,000P^G - 2,500P^T
Q_S^G = 35,000,000 + 15,000,000P^G,
where O_D^T and Q_S^T refer to quantities of tires demand and supplied each month measured in sets of four, Q_D^G and Q_S^G refer to quantities of gasoline demanded and supplied each month measured in gallons, P^G is the price of gasoline per gallon, and P^T is the price per set of four tires.
a. Calculate the equilibrium price and quantity that will prevail in both the tire and gasoline markets. (Hint: Recall that Q_D must equal Q_S in each market.)
b. Assume that a recession causes the demand curve for gasoline to shift leftward as follows:
Q_D^G = 76,000,000 - 30,000,000P^G - 2,500P^T
Calculate the initial impact of this change in demand on the gasoline and tire markets. (You need calculate only one change in P and Q for each market.)
c. Discuss the changes that will occur after the initial round to move each market back to a stable equilibrium. Your answer to part (c) requires no calculations, but graphs would help convey your understanding of the process.

Evaluate the systematic processes involved in clinical interviews compared to formal behavioral assessment procedures.

Explain various definitions and perspectives on personality.

Understand the foundational principles of Freud's psychoanalytic theory.

Identify the key components and dynamics of personality according to Freud.

---

Definitions:

Maximize Revenue

Strategies and actions taken by businesses to increase the total income generated from sales, services, or other business activities.

Substitution Effect

A concept in economics where an increase in the price of a good leads to consumers replacing it with a cheaper alternative.

Consumer Behavior

The examination of how individuals, groups, or organizations choose, acquire, consume, and discard products, services, experiences, or ideas in order to fulfill their needs, and how these activities affect both the consumer and the broader community.

Price Skimming Strategy

A pricing approach where a firm charges the highest initial price customers will pay and then lowers it over time.