For each of the following pairs of goods, which good would you expect to have more elastic demand and why?

required textbooks or mystery novels

Adele recordings or pop music recordings in general

subway rides during the next six months or subway rides during the next five years

root beer or water

The price of aspirin rose sharply last month, while the quantity sold remained the same. Five people suggest various diagnoses of the phenomenon:

Who could possibly be right? Use graphs to explain your answer.

meredith:	Demand increased, but supply was perfectly inelastic.
alex:	Demand increased, but it was perfectly inelastic.
miranda:	Demand increased, but supply decreased at the same time.
richard:	Supply decreased, but demand was unit elastic.
owen:	Supply decreased, but demand was perfectly inelastic.

Consider public policy aimed at smoking.

Studies indicate that the price elasticity of demand for cigarettes is about 0.4 If a pack of cigarettes currently costs $5 and the government wants to reduce smoking by 20 percent, by how much should it increase the price?

If the government permanently increases the price of cigarettes, will the policy have a larger effect on smoking one year from now or five years from now?

Studies also find that teenagers have a higher price elasticity of demand than adults. Why might this be true?