Chapter 5: Q.22 (page 130)
What is the formula for the cross-price elasticity of demand?
The percentage variation in the quantity demanded of a commodity divided by the percentage variation in the price of another commodity is the cross-price elasticity of demand.
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What would the gasoline price elasticity of supply mean to UPS or FedEx?
A storm destroys half the fava bean crop. Is this event more likely to hurt fava bean farmers if the demand for fava beans is very elastic or very inelastic? Explain.
30. In a market where the supply curve is perfectly inelastic, how does an excise tax affect the price paid by consumers and the quantity bought and sold?
What is the formula for elasticity of savings with respect to interest rates?
A city has built a bridge over a river and it decides to charge a toll to everyone who crosses. For one year, the city charges a variety of different tolls and records information on how many drivers cross the bridge. The city thus gathers information about the elasticity of demand. If the city wishes to raise as much revenue as possible from the tolls, where will the city decide to charge a toll: in the inelastic portion of the demand curve, the elastic portion of the demand curve, or the unit elastic portion? Explain.
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