Please answer questions below. There are two parts. Attached is a screenshot for question #5 in part 1. Thank you in advance.

PART 1:

1. Would you consider the demand for prescription drugs to be elastic or inelastic?
2. As a pharmaceutical company taking into account the answer to the first question, what should be your pricing strategy assuming that you have exclusive rights to sell this product (no other competition)?
3. Assume the drug was one which offered a cure for women with breast cancer, but the pharmaceutical company is charging $15,000 for the complete series of injections none of which would be covered by health insurance. Would the demand for the drug be price elastic or inelastic? What inequity would arise in a situation such as this? Should the government step in and establish price controls over the product? Explain your reasoning.
4. Would you consider the demand elasticity of gasoline elastic or inelastic? Explain your reasoning (take into consideration the availability or lack of availability of substitutes).
5. Read "Eye on Your Life," page 133. Identify 2 marketable goods that you feel (for you) are almost perfectly inelastic in demand analysis. You can see by other students' responses how we all have different 'must haves' (inelastic). Explain why you feel that each has an inelastic demand for you. READING LINK: h..4@0.00:0.00
6. Identify 2 marketable goods that for you are demand elastic. Explain each of your choices.
7. Up until recently, custom made surfboards were running upwards of $1,000 and more. Costco came up with a surfboard made with much cheaper material but much easier to learn on with a selling price around $150. Before the introduction of this board, how would you describe the demand elasticity for surfboards? Explain. Would the introduction of the cheaper surfboard have an effect upon the elasticity of the more expensive boards? Explain what that effect would be.

PART 2

1. If a car dealership increases the price of a Toyota truck from $18,500 to $19,500 and, as a result, sales of such cars decrease from 20 units to 12 units per month, what is the price elasticity of demand for this car in this market? Given your answer, explain why it would be wise or unwise to increase the price.
2. For each of the following, determine if demand is more likely to be elastic or inelastic with respect to price:
3. Fresh tomatoes
4. Gasoline
5. Coffee
6. Yachts
7. Restaurant meals
8. If the demand for television repair services is relatively inelastic with respect to price and the repair service providers increase their prices, what will be the impact on total revenues for this industry? Explain.
9. Assume that Lenovo has increased the price of computers it sells by 10%. As a result, sales fall by 35%. Based upon these figures, what is the price elasticity of demand for Lenovo computers?
10. Would you expect the demand for insulin to regulate blood sugar levels in people with severe medical conditions to be close to perfectly elastic or perfectly inelastic? Explain your reasoning.
11. A store has decided to reduce the price of Enya CD's from $19.98 to $16.98, and the number of CD's sold in one week's time increases from 100 to 140, what is the price elasticity of demand for this Enya CD?
12. Referring to #6 above, how much did the total revenue increase or decrease with the drop in price?
13. Determine whether each of the following is more likely to be demand elastic or inelastic:
14. Cable services in a small town without digital satellite as an alternative
15. Food items that make up a large percentage of your weekly budget
16. Prescription medication that is prescribed by a qualified physician
17. Gasoline consumption over a one-month time period
18. A local dog grooming outlet is changing its price for a complete pet wash and groom from $13 to $16, and the number of customers per day decreases from 50 to 40.
19. What is the price elasticity of demand for this service?
20. Is this relatively elastic or inelastic?
21. Will total revenue increase or decrease and by how much?
22. Effective policing of imports of illegal drugs in the U.S. limits the supply leading to higher prices. To the person addicted to illegal drugs, would his/her demand be elastic or inelastic? Explain your reasoning.

Chapter 5 - Elasticities of Demand and Supply As our incomes increase: items that have 0 An income elastic demand take an increasing share of income 0 An income inelastic demand take a decreasing share of income 0 A negative income elasticity of demand take an absolutely smaller amount of income. You can make some strong predictions about how the world will change over the coming years by knowing the income elasticities of demand of different goods and services. Table 5.1 provides a sampling of numbers. These estimated income elasticities of demand tell us that we can expect air travelboth domestic and intemationalto become hugely more important; an increasing share of our incomes will be spent on watching movies, eating out in restaurants, using public transportation, and getting haircuts. Two other promi- nent items not shown in the table, items for which demand is income elastic, are healthcare and education. As our incomes grow, we can expect education and healthcare to take increasing shares of our incomes. As our incomes grow, we'll spend a decreasing percentage on clothing, phone calls, and food. The income elasticity of demand for food is less than one, even for the poorest people. So we can predict a continuation of the trends of the past shrinking agriculture and manufacturing, and expanding services. TABLE 5.1 133 Some Income Elasticities of Demand Good or Service Income Elastic Airline travel Movies Foreign travel Electricity Restaurant meals Local buses and trains Haircuts Income Inelastic Tobacco Alcoholic beverages Clothing Newspapers Telephone Food SOURCES or DATA: See p. C]. Elasticity 5.82 3.4l 3.08 L94 |.6| L38 L36 0.86 0.62 0.5 | 0.38 0.32 0. | 4