QUESTION ONE

A$.$ Fill in the missing amounts in the following table $($SHOW

YOUR WORK$)$

$\%$ Change in Price $\%$ Change in Quantity Elasticity

Demand for the Apple

iWatch

Demand for roses on

Valentine's day

Demand for electronic

cigarettes

B$.$ Would you recommend that Apple raise or lower its prices

for the iWatch to increase revenues? Explain

C$.$ Would you recommend that florists raise their prices for

roses on Valentine's Day if their only goal is to increase

revenues? Explain

QUESTION THREE

Bisan is a fan of both movies and classical concerts. This

month she has $$400$ to spend on the two activities. Let $x$

represent movies and $Y$ represent classical concert

A$.$ What is the price of a ticket to movies? Classical concert?

B$.$ If Bisan decides to spend all her money on movies, how

many movies can she afford?

C$.$ Assume that Bisan has some unexpected expenses one

month and can only spend $$350$ that month. Draw her new

budget constraint