(a) (5 points) * Backgound: Economics departments can produce students who can be policyanalysts or stock brokers. The event: the financial collapse reduces the demand of financialservices firms for stock brokers. The markets: The labor market for policy analysts andthe labor market(b) (5 points) * Background: Oranges are grown in Florida and California, and, until now,Americans didn’t care much about which state their oranges come from. The event: Anews report comes out that Florida oranges use a dangerous pesticide, but that Californiaoranges do not. Moreover, Florida orange growers have been using the pesticide so longthat it is in the soil and stopping now will not help. The markets: the market for orangesfrom Florida and the market for oranges from California.6. (5 points) Elasticity measures the responsiveness of price to a change in quantity or the re-sponsiveness of quantity to a change in price? Explain.7. (10 points) ** How does elasticity differ from a slope, and why is it preferred by economists?Page 2
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