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Unformatted text preview: d. What quantity of coffee will be sold at the price that answers (c)? e. At an average price of $15 a pound, is the demand for coffee elastic or inelastic? Use the total revenue test to answer this question. 2 5. In problem 4, at $15 a pound, is the demand for coffee elastic or inelastic? Use the total revenue test to answer this question. 6. If a 5 percent fall in the price of beef increases the quantity of beef demanded by 20 percent and decreases the quantity of chicken demanded by 15 percent, calculate the cross elasticity of demand between beef and chicken. Are they complement or substitutes? 7. Judy’s income has increased from $10,000 to $12,000. Judy increased her demand for concert tickets by 10 percent and decreased her demand for bus rides by 5 percent. Calculate Judy’s income elasticity of demand for (a) concert tickets and (b) bus rides. Are these goods normal – luxury or necessity- or inferior? 3...
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- Fall '08
- Supply And Demand, $2, $4, $5, $7