Question 5 (8 marks) a. Using the data found in Question 1, calculate (to 2 decimal places) the elasticity of demand and elasticity of supply at each price change in the market for gold picture frames using the midpoint formula for both supply and demand. Because you are calculating the change between two levels, you will have 7 calculations for demand and 7 for supply, for the 8 prices. (2 marks - 1 mark each for correct demand and correct supply elasticities) Price Quantity Elasticity of Quantity Elasticity of Demanded Demand Supplied Supply $20 1,600,000 850,000 $30 1,475,000 525,000 $42 1,400,000 650.000 $50 1,275,000 750.000 $65 825,000 825,000 $75 650,000 985,000 $100 385,000 1,165,000 $115 200,000 1,385.000 b. Based on your elasticity of demand calculation, if the price of T-shirts rises from $42 to $50 will total revenue go up or down? Explain. You need to answer the first part of this question by explaining how you interpreted the elasticity of demand at this point. How much will revenue change (in dollar terms)? (2 marks - 1 mark for calculation, one mark for explanation using c. What is the price elasticity of supply if the price rises from $42 to $50? Is it inelastic or elastic? What does this indicate? (2 marks) d. Explain the difference between price elasticity of supply in the short run and price elasticity of supply in the long run. Provide an example of each (not in the textbook). (2 marks, 1/2 mark for each, 1/2 mark for each example) Question 6 (3 marks) What three virtues of the market system does our textbook emphasize? Explain each and provide specific examples of each (not just what is in the textbook). (1 mark each)