1.Calculate the Price Elasticity of Demand (PED) for diamond rings if there is a price increase from $10,000 to $12,000 and quantity demanded falls from 100,000 to 90,000. Does this answer support what we have learned about elasticity and what we might expect for diamond rings? If so, why? diagram

2.Is a price increase typically a good decision for producers in such a market (i.e. diamond rings)? If so, why?

3.Briefly explain why Cross Elasticity of Demand (XED) is important for business decision-making.

4.Briefly explain why it usually makes sense for the government to impose taxes on markets (and products) that have an inelastic demand instead of markets with an elastic demand.