micro p111 3 8 092604

micro p111 3 8 092604 - after the 5 years have passed and...

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Adam Petrone- ID #000490127 9/27/04 Micro-Economics Sattinger p. 111 #3, 8 3. a) i. (32 – 40)/.5 (72) = 8 / 36 = 1 (10-8)/.5 (18) 2 / 9 ii. (45 – 50) /.5 (95) = 5 / 47.5 x 100 = .47 (10 – 8) / .5 (18) 2 / 9 b) i. % change in Q % change in I 24 – 30 . = 6 x 100 = 30% 10,000 – 12, 000 2,000 ii. 8 – 12 = 6 x 100 = 20% 10,000 – 12,000 2,000 8. a) % change in quantity demanded % change in price 20% = 50% change in price .4 $2 x 50% = $1 $2 original price + $1 increase = $3 b) The price increase will have a greater effect 5 years from now than 1 year from now because people adjust consumption habits over time according to elastic demand. Thus, people will have had more time to adjust their consumption habits
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Unformatted text preview: after the 5 years have passed and decrease their smoking habits. c) The reason that teenagers have a higher price elasticity than do adults is because teenagers are more reckless in their spending. They usually dont tend to have a long-term vision of proper financial management, and thus are more likely to spend too much on a product and pay more than it is worth. Also, their money usually comes from their parents and ergo they have less appreciation for the value of a dollar and are willing to spend money more frivolously....
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