1. If the price of a product increases by 12% and the quantity demanded for it decreases by 3%,

a. Is demand elastic, inelastic, or unitary?Explain.

b. Will this product have an easy or hard to find substitute? Will the product be a luxury or a necessity?Why?

2. The CEO of a company has reported that the demand has fallen from 6.5 million to 5.43 million in a year, despite the fact that the price has decreased by 11.7%.

a. Calculate the price elasticity of demand.

b. Is the product elastic or inelastic?Why

3. The quantity demanded for product A increases by 6% when the price of product B increases by 11%, other variables being the same.

a. Products A and B, are they complementary or substitutes?

b. Using a graph, demonstrate the change in demand for product A.

4. Study the following situation about the relationship between the demand for the following products: beer and nuts.

a. What happens to the demand for beers when the price of nuts increases?

b. Are these products complementary or are they substitutes?

5. The price of a grain increased from $10 to $18, this caused the production of the grain to increase from 4,409 to 4,629 pounds..

a. Determine the price elasticity of supply.

b. Elasticity is elastic, inelastic, perfectly inelastic, or unitary.Why?

6. The price of a storybook has increased from $4.00 to $5.00. At the same time, it was decided to increase production from 100 to 125 units.

a. Determine the price elasticity of supply.

b. Elasticity is elastic, inelastic, perfectly inelastic, or unitary.Why?

7. A company increases the price of its product from $150 to $200 in one month and stocks 30,000 units of this product monthly.

a. Elasticity is elastic, inelastic, perfectly inelastic, or unitary.Why?

b. What could be an example of this product?

8. What is the cross elasticity of demand and how is it measured? Explain and with an example.