Complete the following five questions.

1. Given the following demand schedule from homework 2, question 1:

Price Quantity Demanded

$160 200000

$200 160000

$240 120000

$280 80000

$320 40000

1. Solve for the price elasticity of demand as the price changes from $160 to $200.
2. State whether the elasticity value you obtained in part a signifies the product in this range

to be elastic, inelastic, or unit elastic.

1. Solve for the price elasticity of demand as the price changes from $280 to $320.
2. State whether the elasticity value you obtained in part c signifies the product in this range

to be elastic, inelastic, or unit elastic.

1. Cross Price Elasticity of Demand

a. If the cross price elasticity between products A and B is equal to -1.3, would the two

products be classified as complement, substitute, or unrelated goods?

1. If the cross price elasticity between products A and B is equal to 0.5, would the two

products be classified as complement, substitute, or unrelated goods?

1. Income Elasticity of Demand

a.If the income elasticity of demand for a product is equal to 0.9, would this product be classified as a normal or inferior good? If it is a normal good, would it be considered a

luxury or necessity?

1. If the income elasticity of demand for a product is equal to 3.3, would this product be classified as a normal or inferior good? If it is a normal good, would it be considered a luxury or necessity?
2. If the income elasticity of demand for a product is equal to -2.5, would this product be classified as a normal or inferior good? If it is a normal good, would it be considered a luxury or necessity?

1. Consumer and Producer Surplus

If sneakers are selling in the marketplace for $140, that does not mean that everyone would pay $140, as some would be willing to pay more than that.

1. Assuming that consumer A is willing to pay $200, consumer B is willing to pay $175, consumer C is willing to pay $150, and consumer D is willing to pay $140, then determine the total consumer surplus for the sneakers.
2. Meanwhile, if producer X is willing to accept a price of $100, if producer Y is willing to accept a price of $125, and if producer Z is willing to accept a price of $140, then determine the total producer surplus for the sneakers.

1. The following table reflects the utility one receives from consuming a given product.

Units Consumed Total Utility (TU) Marginal Utility (MU)

0 0 -------

1 90 90

2 ____ 80

3 220 ____

4 250 ____

5 ____ 20

6 280 ____

a. Complete the table solving for the missing total utility or marginal utility values in each

row.

1. Total utility increases throughout the table. At what rate does total utility increase? In other words, is it rising at an increasing rate, a decreasing rate, or a constant rate?Explain.