8. You own a yak yogurt company and hired a bright economics student to do some research. You find out that if the price of yak yogurt goes up by 27% and the quantity demanded drops by 33%.

a. What is the price elasticity of demand for yak yogurt?

b. Is demand for yak yogurt elastic or inelastic? How do you know?

c. If the owner wishes to increase total revenue, should they increase or decrease the price of yak yogurt? EXPLAIN.

9. What is the key determinant for price elasticity of demand? Explain briefly.

10. What is the key determinant of price elasticity of supply? Explain briefly.

11. Economists have estimated the following transportation elasticities. For each pair,explain possible reasons why the elasticities differ.

a. Elasticity of demand for buses is 0.23 during peak hours and 0.42 during off-peak hours.

b. Elasticity of demand for buses is 0.7 in the short-run and 1.5 in the long run.

c. Elasticity of demand for toll roads is 4.7 for low-income commuters and 0.63 for high- income commuters.

12. Sketch a supply and demand graph for an imaginary product of your choice. Draw a relatively elastic supply curve and relatively inelastic demand curve.

13. If the goal of the government is toraise revenue, is it a good idea to place a tax on the purchase of the good demonstrated by thedemand curve in the graph drawn in part #12?EXPLAIN why or why not.