Econ1-Fall2010-PS3 - Econ 1 PS #3: Elasticity Fall 2010...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Econ 1 PS #3: Elasticity Fall 2010 Based on the lecture for Elasticity (A) you should be able to work #1(a), 3, and 5. 1. Suppose a 18% fall in the price of strawberries increases the quantity of strawberries demanded by 24% and decreases the quantity of chocolate demanded by 12%. a. What is the price elasticity of demand for strawberries? Interpret your calculation in words. At the current price level, is the demand for strawberries elastic or inelastic? b. Are strawberries and chocolate complements or substitutes. Briefly explain your reasoning. 2. Briefly explain whether the demand for each of the following products is likely to be elastic or inelastic. a. Milk b. Frozen cheese pizza c. Cola d. Prescription drugs 3. If the elasticity of demand for DVDs is 3, what will a 4% decrease in their price do to the total amount spent on DVDs each week? 4. Assume that the equilibrium price of surfboards is $500, that the equilibrium quantity of surfboards is 600 boards/week, that the elasticity of demand for them
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 2

Econ1-Fall2010-PS3 - Econ 1 PS #3: Elasticity Fall 2010...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online