I JUST need help with question 2,5,7,10

CHAPTER 4: ELASTICITY 115 Quantity of VCRS Per Capita Annual LO 4.5 Define price elasticity of supply and describe the per Year Group Income difference between the long-run and short-run supply schedules. $15 000 2000 20 000 11. Suppose that the price of salt rises from 15 cents to 17 cents a kilogram. The quantity demanded decreases a. Is the demand for this product income-elastic or from 525 kilograms to 475 kilograms per month, and income-inelastic? the quantity supplied increases from 525 kilograms to b. Would you consider this commodity a luxury or a 600 kilograms per month. (Use averages in calculating necessity? elasticities.) 10. Which of the following cross-elasticities of demand a. Calculate the elasticity of supply (E ) for salt. would you expect to be positive and which to be negative? b. Is the supply of salt price-elastic or price-inelastic? a. Tennis balls and tennis racquets b. Tennis balls and golf balls 12. From Issues and Applications, "To Combat Cigarette C. Dental services and toothpaste Consumption, Should the Government Raise Taxes on Dental services and candy Beer?", we found out that smokers regard beer as a com- e . Soft drinks and ice cubes plement. If taxes are increased on beer, what will happen f . Soft drinks and fruit juices to cigarette consumption?114 PART 2: DIMENSIONS OF MICROECONOMICS a. Using the mid-point formula, determine the elas- b. What is the price elasticity of demand along the ticity of demand for each price change. (Example: range of the demand curve between a price of $0.80 When price changes from $5 to $10, quantity demanded changes from 1000 to 800 kilograms, so 1.80 the elasticity of demand, using average values, is 1/3 or 0.33.) 1.60 b. Could coffee be considered a substitute for tea? c. Would you consider this commodity a luxury or a 1.20 necessity? Price ($ per miniburger) 2 . Calculate the price elasticity of demand for the product 4 0.80 in the table below using average values for the prices and quantities in your formula. Over the price range in question, is this demand schedule inelastic, unit-elastic, 0.40 or elastic? Is total revenue greater at the lower price or 0.20 the higher price? 10 20 40 60 80 90 120 Price per Unit Quantity Demanded Quantity (miniburgers per day) $4 18 per miniburger and a price of $1.20 per miniburger? Is demand elastic or inelastic over this ranger 3 . A new mobile home park charges nothing whatsoever for water used by its inhabitants. Consumption is 100 000 What is the price elasticity of demand along litres per month. The decision is then made to charge the range of the demand curve between a price of according to how much each mobile home owner uses, at $1.60 per miniburger and a price of $1.80 per a rate of $10 per 1000 litres. Consumption declines to miniburger? Is demand elastic or inelastic over this 50 000 litres per month. What is the difficulty here in range? accurately estimating the price elasticity of the demand for LO 4.2 Define the three price elasticity ranges and explain their water by these residents? effects on total revenues. Suppose that the price of salt rises from 15 cents to 17 cents a kilogram. The quantity demanded decreases 7 . Can any demand curve possibly be perfectly inelastic from 525 kilograms to 475 kilograms per month, and the Ep = 0) regardless of price? Explain. quantity supplied increases from 525 kilograms to 600 kilograms per month. (Use averages in calculating LO 4.3 Discuss the three factors that determine the price elasticities. elasticity of demand. a. Calculate the price elasticity of demand (E) for salt. 8. Given each example, determine whether price elasticity b. Is the demand for salt price-elastic or price- will tend to be elastic or inelastic. inelastic? a. A 45-cent box of salt you buy once a year 5 . Suppose that an automobile dealer cuts his car prices b. A type of high-powered ski boat you can rent from by 15 percent. He then finds that his car sales have any number of rental agencies increased by 10 percent. C. A 75-cent guitar pick for the lead guitarist of a a. What can you say about the price elasticity of major rock band demand for cars? For Example 4-3, "What Do Real-World Price b. What will happen to the dealer's total revenue? Elasticities of Demand Look Like?", cheese has a price 6. The diagram below depicts the demand curve for elasticity of demand of around 0.3. Does the quality of "miniburgers" purchased from Joe's Campus Grill. Use substitutes affect this elasticity? the information in this diagram to answer the following LO 4.4 Describe the effects of substitutes, complements, and questions. a What is the price elasticity of demand along the range income on elasticity of demand. of the demand curve between a price of $0.20 per 9. Calculate the income elasticity of demand for the miniburger and a price of $0.40 per miniburger? Is product in the following table, using average values for demand elastic or inelastic over this range? incomes and quantities