3. When the price of paper increases from $100 to $104 per ton, the quantity supplied increases from 200 to 220 tons per day. What is the price elasticity of supply? (2 points)

4. When a professional football team raises its ticket prices by 10 percent, its sales revenues decline. From this information, what can you say about the price elasticity of demand for its tickets? (2 points)

5. If the price of gasoline is $2.00 and the price elasticity of demand 0.4, what is the new price if there is a 10 percent reduction in the quantity? (2 points)

6. Diamonds clearly satisfy less important needs than water, which is essential to life. Yet according to market prices, the essential commodity, water, is worth less than the less essential commodity, diamonds. Why would a vital commodity such as water sell for so much less than diamonds? Does this imply that there is something wrong with a market system that values diamonds more than water? Explain using demand and supply curves for water and diamonds. (2 points)