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The price of insulin increases by 10% and the quantity demanded of insulin remains unchanged. The demand for insulin is
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- Plot the price and quantity data given in the demand schedule of exercise 1. Put price on the vertical axis and quantity on the horizontal axis. Indicate the price elasticity value at each quantity demanded. Explain why the elasticity value gets smaller as you move down the demand curve.What does a price elasticity of demand of 0.39 mean?A recent report by the Centers for Disease Control looked at the relationship between the price of beer and the incidence of new cases of STD's. The report concluded that a beer tax increase of $.20 could reduce overall STD rates by 8.9%. Assume that a six pack cost $5.90 before the price increase. Calculate the cross price elasticity between beer and STD's. What is the sign of this cross-price elasticity? According to your estimate, are beer and STD's compliments or substitutes? Does your answer make sense? Explain.
- What will happen to the demand for ginger if scientific research proves that ginger helps to reduce diabetes.The elasticity of demand for some products is affected by the personal values of potential customers. Consider devout practioners of Islam who believe it is wrong to eat pork. In muslim communities, the elasticity of demand for pork is 0.0, or complete inelastic―consumers will not buy pork no matter what happens to its price.Consider public policy aimed at smoking. Studies indicate that the price elasticity of demand for cigarettes is about 0.2. If a pack of cigarettes currently costs $5 and the government wants to reduce smoking by 10%, it should increase the price by . If the government permanently increases the price of cigarettes, the effect on smoking 1 year from now will be than the effect 3 months from now. Studies also find that teenagers have a higher price elasticity of demand than do adults. Which of the following statements are consistent with this result? Check all that apply. Teenagers do not have as much income as adults, so they are more price sensitive. It is legal for adults to consume alcohol, so many choose to spend their money on that good rather than cigarettes. Adults are more likely to be addicted to cigarettes.
- What is a real-world question involving price elasticityDraw a graph of a perfectly inelastic demand curve. Use the line drawing tool to graph a perfectly inelastic demand curve. Properly label this line. Carefully follow the instructions above, and only draw the required objects. The drug insulin is one example of a product that would have a perfectly inelastic demand curve. QuantityFred gathered data on the price and quantity demanded of chocolate over the course of a week. He found the price elasticity of demand for chocolate to be 0.3. If fred gathered data over the course of a year, he would find the price elasticity of demand to be Response area 0.3. Is it Greater than, less than, or equal to?
- If the price increases by 10%, what would happen to the quantity demanded when the price elasticity of demand is 0.7 (we ignore minus sign)Suppose you could buy shoes one at a time, rather than in pairs. What do you predict the cross-price elasticity for left shoes and right shoes would be? How does the cross-price elasticity concept inform a decision making process for the consumer?When the price of a good is $100, the quantity supplied is 750 units; when the price is $200, the quantity supplied is 1,250 units. Using the midpoint method, compute the price elasticity of supply for the good.
