Unformatted text preview: 5 2 4 (2) If a 20 percent increase in price causes a 10 percent drop in the quantity demanded is the price elasticity of demand elastic, unitary, or inelastic? (3) Characterize each of the following goods is perfectly elastic, relatively elastic, relative inelastic, or perfectly inelastic. a. A life-saving medication b. A copy store charges 11 cents per copy when all of their competitors charge 10 cents. c. A fast food restaurant located in the food court of a shopping mall. d. The water bill you pay. (4) Do customers who visit convenience stores at 3 am have a price elasticity of demand that is more or less elastic than those who visit at 3 pm?...
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This note was uploaded on 10/23/2009 for the course GS 233252 taught by Professor Dirkmateer during the Fall '09 term at Penn State.
- Fall '09