1. Imagine that you work at a theater, and there is a meeting concerning how to best increase the total revenue coming into the theater. One group is arguing that the way to increase total revenue is by reducing the ticket price, while the other group is arguing that the way to increase revenue is to increase the ticket price. Examine each group's argument in terms of the implicit assumptions they make regarding ticket price elasticity. Then explain which one you believe will boost total income the most, as well as why the other will fail. 2. Think of some examples of products and businesses that would have various degrees of Elasticity of Supply. For example, what would be the Elasticity of Supply for an original piece of art? What does this imply for the adjustment in this market to a change in Demand? How would you describe the Elasticity of Supply for a product such as peaches, plums, and other tree fruit? Consider first a brief period, such as weeks, and next a much longer period such as five years. How does the time horizon influence market adjustment when there is a change in Demand? Explain these examples and provide a few of your own examples. 3. Use the midpoint method. Suppose the price of laundry detergent increases from $7 to $9 per bottle. If the quantity demanded decreases from 10,500 cases to 9,500 cases, calculate the price elasticity of demand. Is the demand elastic? Why or why not? Now suppose it is only one brand of laundry detergent that increases from $7 to $9 per bottle. The quantity of that brand demanded drops from 2,500 to 1,500 cases. Calculate the elasticity of demand for this laundry detergent specifically. Explain the difference between one brand's elasticity of demand and the elasticity of demand for laundry detergent in general. 4. Use the midpoint method. Suppose that the price of apples increases by 10%. Within a short amount of time, apple producers are able to increase the quantity of apples supplied by 2%. The higher price has made it worthwhile to use extra labor to reduce waste and spoilage. Is this short run adjustment showing elastic or inelastic supply? Explain. Now assume that over a 10 year period of time the overall quantity of apples has grown from 11,000 pounds to 13,000 pounds. Now recalculate the price elasticity of supply for this longer period of time and explain the difference between elasticity of supply in the short run and in the long run