Question

Instructions: Answer the following 5 questions using the mid-point method. Please write out formulas and show your work.

1. Price Elasticity of Demand. Before: P=1, Qd = 4; After: P =3; Qd =0.

2. Given your answer to #1, is this demand curve elastic or inelastic over this range? Why?

3. Income Elasticity of Demand. Before: I=100, Qd = 1; After: I =200; Qd =3. Normal or inferior?

4. Given your answer to #3, is this good normal or inferior? Why?

5. Cross-price Elasticity of Demand. Before: Pgood A=5, Q good B =4; After: Pgood A =3; Q good B =2.

6. Given your answer to #5, are these goods substitutes or complements? Why?

7. Elasticity of Supply. Before: P=1, Qs = 4; After: P =3; Qs =6. Elastic or inelastic?

8. Given your answer to #7, is this supply curve elastic or inelastic over this range? Why?

9. Price Elasticity of Demand. Before: P=5, Qd = 9; After: P =7; Qd =7. Elastic or inelastic?

10. Given your answer to #9, is this demand curve elastic or inelastic over this range? Why?

Answer 1