Question 3 a. Suppose we observe that the price of crude oil increases, while the quantity of crude oil sold increase as well. Use supply and demand curves to illustrate two possible explanations for this pattern of price and quantity changes. [3 marks] b. For the following pairs of goods, would you expect the crossprice elasticity of demand to be positive, negative, or zero? Briefly explain your answers. i. Panadol and Cetamol [2 marks] ii. CDs and Cassette tapes [2 marks] iii. Coffee and Creamer [2 marks] iv. Cereal and Petrol [2 marks] c. Using the table below answer the following questions: Price of Cheese Price of Pizza Quantity Quantity Bread Demanded Demanded of of u izza Cheese Bread a. Calculate the price elasticity of demand for pizza. Is the demand for pizza elastic, inelastic or unit elastic? Briefly explain. [5 marks] b. Calculate the cross price elasticity for cheese bread. Are these goods substitute or complement? Briefly explain. [5 marks]