e360_apape_midterm1_review

D 10 points what is davids elasticity of income for b

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(d) (10 points) What is David’s elasticity of income for B-Mets caps at price p D = $20. Which of the following terms apply to B-mets caps? Normal, inferior, basic, luxury. 2. (5 points) ** Which of the following will create a larger percent decrease in demand for the good in question: a 10% increase in the price of gasoline, or a 10% increase in the price of Dr. Pepper? Explain WHY, using relevant concepts. 3. Fresh Lettuce in Binghamton. The farmers’ markets in town sell cucumbers every summer for greater Binghamton. The supply and demand curves for the fresh cucumbers market are given below: q s ( p s ) = 100 p s - 10 q d ( p d ) = 50 - 20 p d (2) (a) (9 points) How many cucumbers will be sold in Binghamton? At what price? (b) (10 points) * The mayor of Binghamton, under pressure from Weis Market, levies a tax on cucumbers sold at the farmers’ markets: $1 on each cucumber sold. Once this tax is enacted, what price will consumers pay for cucumbers? (c) (5 points) * How many cucumbers will be sold in Binghamton after the tax? (You can round to the nearest cucumber if you like.) (d) (5 points) ** Using your estimate in part c, how much tax revenue will be raised by this tax?
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