URGENT PLEASE! APPLIED ECONOMICS: PRICE ELASTICITY

Part I. Direction: Analyze the following problems. Solve the problem and interpret the results. Write your answer on the space provided.

1. If there are 10 bottles of water and there are 20 students who want to drink these bottles of water, there will be only 10 students whose demands are met while the others will not.
   • Analysis: We can conclude that there is _____________________ in the supply.
2. If price of canned good in the grocery store increases by 8% and the quantity demanded decreases by 12%, what is price elasticity of demand? Is it elastic, inelastic or unitary elastic?
   • Solution:
   • Interpretation:
3. If a 4% increase in price of 1 pack of bread leads to an increase in the quantity supplied of 8% describe the price elasticity.
   • Solution:
   • Analysis of price elasticity: