5 points 3a are the following pairs of goods

[5 points]
3a. Are the following pairs of goods substitutes or complements? Indicate whether their
cross-price elasticities are negative or positive.
i. Bread and butter
ii. Steak and mash potatoes
iii. Tennis rackets and golf clubs
iv. BMW automobiles and Mercedes-Benz automobiles
[5 points]
3b. Explain why the elasticity of demand declines along a liner demand curve.

[5 points]
4a. If the price of gasoline is $2.00 and the price elasticity of demand is 0.5, how much
will a 10% reduction in the quantity placed on the market increase price? Will total
spending on gasoline increase? If so, by what percentage?
[5 points]
4b. Suppose a coffee shop located across the street from a large college campus typically
has about 1,000 patrons per week who purchase coffee at the café. Assume the price
for a cup of coffee is $2.00. Suppose the café raises the price of a cup of coffee to
$2.10 and loses all of their customers. Compute the price elasticity of demand for
coffee. What does this suggest about coffee? Draw the demand curve for coffee.