4. (10 points) Assume that the demand for plastic surgery is price inelastic. Please explain whether the following statements are true or false. You must give an explanation in each case.

(a) When the price of plastic surgery increases, the number of operations will decrease.

(b) The percent change in the price of plastic surgery is less than the percent change in quantity

demanded.

(c) If price of plastic surgery is decreased, the expenditure on plastic surgery by the public will

rise.

(d) A plastic surgeon will reduce the price of surgery he performs in order to increase his

income.

6. (5 points) If Julie prefers Diet Coke to Diet Pepsi and Diet Pepsi to regular Pepsi but is indifferent between Diet Coke and Classic Coke, what are her preferences between Classic coke and regular Pepsi (which one does she prefer)? Please give an explanation.