1. Provide an example of a purchasing situation in which you think your own shortand longrun elasticities differ a lot and a second in which they are similar. What drives those differences? Frank runs a corner delicatessen and decides one Monday morning to raise the prices of his sandwiches by 10 percent.

Because Frank knows a little economics, he expects that this price increase will cause him to lose some business because demand curves slope down, but he decides to try it anyway.

At the end of the day, Frank discovers that his revenue has, in fact, gone up in the sandwich department. Feeling pleased with himself, Frank hires someone to create signs showing the new prices for the sandwich department. At the end of the month, however, he discovers that sandwich revenue is way down. What is going on?