1.For each of the following products, indicate whether demand is likely to be elastic or inelastic by entering whether |e| 1 .

(a) Range Rovers (b) Kit-kat bars (c) Ribeye steak (d) Crude Oil (e) Heroin (f) SoHo Apartments

2.For each of the following products, indicate whether supply is likely to be elastic or inelastic by entering whether |e| 1

(a) Soho Apartments over 5 years (b) Soho Apartments over 1 year (c) Yoga classes (d) Roses in rural Maine (e) Roses in the US (f) Marble

3.Risingoilpricesduringthe1970sshiftedflowerproductionfromCaliforniatoKenya.Whichof thefollowinganswersexplainsthisshift? a.Marketsarelinkedtooneanother. b.RisingoilpricesdecreasedgreenhouseheatingcostsinCalifornia,makingitcheaperto growflowersinwarmerclimates. c.TheKenyanflowerindustryisrunbytheCaliforniaflowergrowers. d.Notransportationcostsexistforflowers.2.It'sworthwhiletogrowrosesinKenyabecause: a.peopleinAmsterdamdon'tcooperatewithpeopleinKenya. b.veryfewpeoplehavetobeinvolvedintheprocessofsupplyingrosesgrownthere. c.it'simpossibletogrowrosesanywhereelse. d.thegainsfromgrowingrosesinanidealclimatearegreaterthanthecostsoftransporting rosesaroundtheworld.3.Althoughlargepartsofbeefcattlebecomemeatproducts,otherpartsbecomeleatherjackets. Asthedemandforbeefrises,whathappensinthemarketforleatherjackets? a.Supplydecreasesandpriceincreases. b.Demandandpriceincrease. c.Supplyincreasesandpricedecreases. d.Demandandpricedecrease.4.Centralplanningusuallyfailsbecause: a.ofthescarcityofresources. b.ofproblemsofinadequatedemandandsupply. c.centralplannersrelyonmarketforces. d.ofinformationandincentiveproblems.5.Themarketsolvestheinformationproblemwhenallocatingresourcesby: a.collapsingalltherelevantinformationaboutusesofthegoodintoitsprice. b.collapsingalltherelevantinformationaboutinputsofthegoodintothelevelofoutput. c.aggregatingalltherelevantinformationabouttheoutputofthegoodintothesupplycurve. d.aggregatingalltherelevantinformationabouttheoutputofthegoodintothedemand curve