1. Suppose the elasticity of demand is = - 3. a. When the price rises by 1%. the quantity demanded falls by: { }\"/'u. b. When the price rises by 3%. the quantity demanded falls by: \"or... 1:. Suppose the elasticity of demand is - 0.4. When the price falls by 1%. the quantity demanded increases by: { w... d. When the price falls by 12%. the quantity demanded increases by: \"or... 2. For each of the following pairs of goodslservices. determine which demand is likely to be LESS elastic. a. Demand for: corn or food Demand for pop: at O'Hare Airport or at Crystal Lake Watmart Demand for: chewing gum or automobiles Demand for: Root Beer or water Demand for gasoline over: a 2-hour period or a 6-month period Demand for: Dell computers or computers Demand for: insulin or Aspirin Demand for haircuts oi: aduits or children i. Demand for movie tickets for: the general public or students 3. Conside;r public policy aimed at smoking. Studies indicate that the elasticity of demand for cigarettes is about - 0.4. What will happen to the tax revenue from cigarettes if the govemment increases the tax on cigarettes? a. {l"ltwil| increase", "It will decrease". 'ltwill stay the same."] } 4. If MCC lowers the tuition. under what condition. will the revenue from tuition increase? a. t ["The demand for MCC education is elastic". "The demand for MCC education is inelastic". "The demand for MCC education is unit-elastic."] } 5. A municipal transit system is losing money. An economic consultant suggests that the transit system would have more revenue if it lowered its fares, tithe consultant is right. what can you say about the demand for public transport? a. {I'The demand for public transport is elastic\". \"The demand for public transport is inelastic". "The demand for public transport is unit~elastic.'] } 6. In a study of the New York Transit Authority. an economist discovers that the elasticity of demand for subway is - 0.15, On the basis of this information. would a rise in the subway fare increase or decrease the Transit Authority's revenues from subway? a. {["lt would increase". \"It would decrease". "It would not change."] } 7. D. Chapman. T. Tyrell. and T. Mount estimated that the longrun elasticity of demand tor electricity by all US, residential consumers is - 1.2. What would happen to the total expenditure by the consumers in the long run if the price of electricity were reduced? a. {["lt would increase". 'It would decrease". "It would stay the same") i 8. Explain the foilowing NPR article: "You've all heard a lot about this year's ' ll null HI' :1" i I-t'I-I-II -.|-' u-r-n intheMidwest. someone a. {["The demand for corn was elastic.'. \"The demand for corn was inelastic", "The demand for corn was unit-elastic."| } 9. In 1976, a frost in Brazil killed over 500 million coffee trees and damaged many more. A civil war in Angola, a major supplier of coffee. cut back its production. An earthquake in Guatemala disrupted the ow of coffee, But these producers reported an increase in export revenue. Why? a. { ["The demand for coffee was elastic". "The demand for coffee was inelastic\". "The demand for coffee was unit-elastic.\"] ) 10. The president ofa leading producer of tantalum says that an increase in the price of tantalum would have no effect on the total amount spent on tantalum. If this is true, what can you say about the price elasticity of demand for tantalum? Explain. a. {t'The demand for tantalum is elastic". "The demand for tantalum is inelastic". "The demand for tantalum is unit-elastic."] } 11. Suppose consumers spend $15 a month on CDs, regardless of whether the price they pay goes up or down. What can you say about the consumers' demand for CDs? a. { ["The demand for CD5 is elastic". \"The demand for CDs is inelastic". \"The demand for CDs is unit-elastic.'] )