There are other vending machine owners in the area. When doing your experiment, you also wanted to know how much competition there would be at different price levels. You spoke with the owners of the other vending machines, and collected data on the number of candy bars that they were willing and able to sell at different prices. At a price of $0.80 cents, they were willing to sell 80 units. At a price of $1.00, they were willing to sell 120 . With this information, you were able to construct a rough sketch of a supply curve. r day) 8. You can use this curve to determine how responsive the other suppliers are to a price change. This should give you an idea about how much competition to expect if demand increases. What is the price elasticity of supply? Use points A and B and the elasticity formula. Is it elastic or inelastic? (note: the calculation should look very similar to \#1. Pay attention to the direction of the slope and the sign of the elasticity) 9. To get even more data, you gave a group of people free candy bars for filling out a survey. It asked them their income, and how many candy bars they would be willing to buy each week at 90 cents per bar. At an income of $30,000, people buy about 4 candy bars per month on average. At an income of $40,000, people buy about 6 candy bars per month on average. Are your candy bars a normal or inferior good? If the candy bars are inferior, explain why using their income elasticity. If the candy bars are a normal good, are they a luxury or a necessity? You can do the calculations, or you could also just look at the direction of the changes (together=normal/opposite=inferior), and the magnitudes (quantity changes by larger %= luxury, income changes by larger %= necessity) Given that each row on the vending machines can only hold chips or candy bars, if a new research study suggests that eating chocolate will make you healthier, then candy bars will become more popular. This will increase the demand for candy bars (and also the price you can charge). If people are willing to pay more for candy bars, what do you think should happen to the supply of chips? Do you think that the cross price elasticity of supply between chips and candy bars should be positive or negative? (i.e., If you own vending machines and the sales price of candy can go up, what do you do to the supply of chips in your vending machine? Slots in your machine can only hold one or the other.)