Whole Foods decided to cut prices on many products, especially produce, after its acquisition

by Amazon. For example, in its Austin, TX stores, it has cut the price of organic baby kale

from $4 to $3, and the price of organic rotisserie chicken from $10 to $8.

Suppose the price elasticity of demand of eggs is -0.4.

a.) How would you characterize the elasticity of demand for eggs? Relatively elastic? Or

relatively inelastic? Explain in words, and give at least one additional example of a good

which would fall in this same category.

b.) If the price of eggs decreased by 20%, what would you anticipate to happen to the quantity

demanded of eggs? Give a precise numerical answer.

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c.) Now you notice that in response to the 20% price decrease for eggs, the quantity demanded

of ham increases by 25%. What is the cross-price elasticity of ham and eggs?

d.) Additionally, you notice that in response to the 20% price decrease for eggs, the quantity

demanded of bacon increases by 15%. What is the cross-price elasticity of bacon and eggs?

e.) What is the relationship between ham and eggs? Bacon and eggs? Is one relationship

stronger than another? Explain using elasticity.