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E202ProblemSet3.1 - 8 Suppose that the ingredients required...

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Problem Set Three Name _____________________ Chapter 4 4. Is the demand for a particular brand of car, like a Chevrolet, likely to be more or less price- elastic then the demand for all cars? Explain. 5. Among the following groups – senior executives, junior executives, and students – which is likely to have the most and which is likely to have the least price-elastic demand for membership in the Association of Business Professionals? 6. A 2 percent increase in the price of milk causes a 4 percent reduction in the quantity demanded of chocolate syrup. What is the cross-price elasticity of demand for chocolate syrup with respect to the price of milk? Are the two goods complements or substitutes?
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Unformatted text preview: 8. Suppose that the ingredients required to bring a slice of pizza to market and their respective costs are: paper plate, 2 cents, flour 8 cents, tomato sauce 20 cents, cheese 30 cents, and labor 60 cents (3 minutes @ $12/hour). If these proportions remain the same no matter how many slices are made, and the inputs can be purchased in any quantities at these stated prices, draw the supply curve of pizza slices and compute its price elasticity. Chapter 5 2. You are having lunch at an all-you-can-eat buffet. If you are rational, what should be your marginal utility from the last morsel of food you swallow?...
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