1)

a. What is the formula for measuring the price elasticity of supply? E_s = (A)percentage change in quantity demanded / percentage change in income

(B)percentage change in quantity demanded / percentage change in price

(C) percentage change in quantity supplied / percentage change in price b. Suppose the price of apples goes up from $21 to $25 a box. In direct response, Goldsboro Farms supplies 1,400 boxes of apples instead of 1,300 boxes. Compute the coefficient of price elasticity (midpoints approach) for Goldsboro's supply. Instructions: Round your answer to two decimal places. E_s =

c. Is its supply elastic, or is it inelastic?

2) You are a newspaper publisher. You are in the middle of a one-year rental contract for your factory that requires you to pay $700,000 per month, and you have contractual labour obligations of $1,250,000 per month that you can't get out of. You also have a marginal printing cost of $0.35 per paper as well as a marginal delivery cost of $0.1 per paper. a. If sales fall by 20 percent from 1,000,000 papers per month to 800,000 papers per month, what happens to the average fixed cost per paper and to the marginal cost per paper? Instructions: Round your answers to two decimal places. Average fixed cost per paper = (SELECT) (rises /falls) from $ _____ per paper to $ _____ per paper. Marginal cost per paper = (select) does not change /changes . b. What happens to the minimum amount that you must charge to break even on these costs? Instructions: Round your answers to two decimal places. The amount = (select) (increases/ decreases) from $ _____ per paper to $_____ per paper.