Explain question 2; 8; 13 and 14

using the point form), cross-price elasticity with good EXERCISES x, and income elasticity. Q=8 - 2P + 0.101 4 P, Use the following hypothetical demand schedule for movies g Cars made in Japan and cars made in the United States Q is quantity demanded. P is the product price, P, to do exercises 1-4 7. Explain how consumers will react to a job loss. What is the price of a related good, and I is income. Assume that P- $10. 1 = 100, an Quantity Demanded Price Elasticity will be the first goods they will do without? What is the income elasticity of demand for those goods? 14. Plot the following price and quantity. Then calculate 100 8. Calculate the income elasticity of demand from the bol price elasticity of demand at P = 8, P = 4, and P = 1. 80 $ 10 lowing data (use the are or average). a 60 P 40 5 20 Income Quantity Demanded 10 $ 25 $15,000 20,000 $20,000 30,000 1. a. Determine the price elasticity of demand at each a. Explain why the value is a positive number. quantity demanded using the are or midpoint formula: Percentage change in quantity b. Explain what would happen to a demand curve as 12 income changes if the income clasticity was 20, 14 demanded = (0. - 0,NO, divided by percentage change in price = (P. = P.) UP Compare that outcome to the situation that would b. Redo exercise la using price changes of $10 rather occur if the income elasticity of demand was (.2 than $5. 9. a. Use the following figure to show what occurs to 2. Plot the price and quantity data given in the demand price and quantity when supply decreases and schedule of exercise i. Put price on the vertical axis and demand is perfectly elastic. quantity on the horizontal axis. Indicate the price elas b. Use the figure to show what occurs to price and ticity value at each quantity demanded Explain why quantity when supply increases and demand is per- the elasticity value gets smaller as you move down the fectly inelastic. demand curve. 3. What would a ID percent increase in the price of movie Perfectly Inelastic tickets mean for the quanting demanded of a movie the Demand ater if the price listicity of demand was 0.1. 05, 1.0. and 50? 52 4 Using the demand curve plotted in exercise L. illustrate Perfectly Elloshe what would occur if the inc elasticity of demand Demand was 0.05 and income rose by 30 percent. If the income elatucity of demand was 3.0 and income sine by 10 per cent, what would occur? 5. Pick a good whose demand is price elastic. List five sub statutes and five complements, Which is easier to come up with, the list of substitutes or the list of comple ments? Explain. 10. Explain why a 40 percent across the-bo 6. Are the following pairs of goods substitutes or comple- on businesses might harm consumers. mental indicate whether their cross-price clasticities are 11. The price elasticity of the demand for gasoline is - Die negative or positive The price elasticity of demand for gasoline at Joe's to a. Bread and better station is - 1.2. Explain what might account for the die b Bread and potatoes ferent clast c Sacks and shoes 13. The cross price elasticity of the demand for cell phone d Tennis rackets and golf clubs and DVD, is 1.2. Explain. The cross price elasticity of e Bicycles and automobiles the demand for the iPod and DVDS - I Fourign investments and domestic invest 13. Using the following equation for the demand for a good or service. calculate the price elasticity of demand