Microsoft%20Word%20-%20HW4

# Microsoft%20Word%20-%20HW4 - 1 The following are the...

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1. The following are the estimated price elasticities of demand for various fruits Fruit Elasticity of Demand Apple -0.16 Banana -0.42 Grapefruit -1.02 Grapes -0.91 Orange -1.14 A. Which fruits would the demand be classified as inelastic? Elastic? B. Suppose that the price of each fruit increased by 20%, calculate the effect on quantity demanded for each fruit. C. Suppose that the supply of each fruit decreased, for which fruits would this lead to an increase in total revenues. D. If we observed a 10% decrease in the quantity of each fruit, what has happened to the price of each fruit? 2. Suppose that economists and engineers initially earn the same salary. The elasticity of demand for economists is -1.50 and the elasticity of demand for engineers is -0.50. A. Which profession is demand elastic? Inelastic? B. Immigration in the United States is steady and across all fields. This will lead to a big boost in the labor supply. Which profession would you prefer (you are indifferent to the jobs other than caring about having the higher salary). 3.

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Microsoft%20Word%20-%20HW4 - 1 The following are the...

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