Ch.3 HW - Anthony Marsala Prof. Woodbury EC251H Sec. 2 Ch....

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

View Full Document Right Arrow Icon
Prof. Woodbury EC251H Sec. 2 Ch. 3 Homework Pg. 70-72 #8, 10, 12, 18, 19, 20, 21, 24, 27, 31 8. The section of a straight-line demand curve that is elastic is where price elasticity of the good demanded is less than -1. 10. The demand curve must be elastic because the decrease in wages is fairly small. Excess supply will force the supply curve to shift to the right causing a decrease in equilibrium price (wages). Red = Original Supply Blue = New Supply Green = Demand (Doesn’t Change) 12. The income elasticity is between 0 and 1, which infers that cable television is a necessity. 18. When demand is perfectly inelastic a $1 tax will raise the equilibrium price by $1 but the equilibrium quantity will remain the same. The tax burden is entirely on consumers because when demand is perfectly inelastic Ed = 0 so ΔP/Δt = 1 or %100 incidence on consumers. 19. When demand is perfectly elastic a $1 tax will reduce the equilibrium quantity but the equilibrium price will remain the same. The tax burden is entirely on sellers because
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.

This note was uploaded on 10/04/2011 for the course EC 251h taught by Professor Woodbury during the Fall '10 term at Michigan State University.

Page1 / 2

Ch.3 HW - Anthony Marsala Prof. Woodbury EC251H Sec. 2 Ch....

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