Homework_4 - 5 2 4(2 If a 20 percent increase in price...

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Extra Credit Homework #4 : Due October 22 nd at the end of class. Your Name: ____________________________ Your PSU email: ________________________ Directions : All homework answers MUST be TYPED. No EMAIL SUBMISSIONS. The homework is collected in class. If you can’t be in class then send your homework with a friend or turn it in EARLY under my office door labeled with the time your section begins. (Each question is worth $500) (1) You have $60 to spend for a party. What combination of pizzas should you buy in order to maximize your utility? Number of pizzas purchased Marginal Utility from Canyon Pizza ($8 large) Marginal Utility from Pizza Hut Pizza ($12 large) 1 16 24 2 12 12 3 8 8 4 4 6
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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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