Bryce McBride
Elasticity Quiz – Economics 11Name:The market for ketchup can be described as follows:Price/bottleQuantity SuppliedQuantity Demanded$110 90$1.1020 80$1.2030 70$1.3040 60$1.4050 50$1.5060 40$1.6070 30$1.7080 20Calculate the price elasticity of demand for a price change from $1.30 to $1.40. [2]Calculate the price elasticity of supply for a price change from $1.30 to $1.40. [2]Which is more elastic with respect to price at this interval, demand or supply? [1]Should the firm raise of lower the price of their ketchup? Explain your answer. [2]Draw a supply/demand diagram representing the information above on the grid below. [3]HL only: If an indirect tax of 30 cents ($0.30) per bottle were applied to ketchup, what would be:The impact on resource allocation [1]The total revenue collected by the government [2]The share of total revenue paid by consumers and producers [2]My economy is slipping into recession, and people’s incomes are falling. I know that the income elasticity of demand for product A is -0.8 and the income elasticity of demand for product B is +0.7.Which product should my company seek to sell during this time and why? What might the product actually be (ie give an example of a real product with that YED)? [3]I am a seller of skateboards and I realize that many people who skateboard at the skate park (which costs $2 per entry) eat at a nearby diner called “Moe’s Grill” afterwards.What would you expect to be the value of the CPED looking at skate park entry fees and the number of meals served at Moe’s? Explain your answer. [3]If you were the owner of Moe’s diner, how might you use knowledge of CPED to increase your volume of business? Explain your plan in some detail. [2]State one reason why the:Price elasticity of demand for toilet paper be fairly low? [1]Price elasticity of supply for consumer electronics goods (MP3 players, TV sets etc.) be fairly high? [1] ................
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