1. (Figure: Demand Curve for Pears) Use Figure: Demand Curve for Pears. The figure shows a demand curve that is: P unit-elastic. O elastic. Operfectly elastic. O perfectly inelastic. D Q

Why is the supply curve with constant unitary elasticity a straight line?

Would you expect supply to play a more significant role in determining the price of a basic necessity like food or a luxury like perfume? Explain. Hint: Think about how the price elasticity of demand will differ between necessities and luxuries.

What is the formula for the income elasticity of demand?

Economists define normal goods as having a positive income elasticity. We can divide normal goods into two types: Those whose income elasticity is less than one and those whose income elasticity is greater than one. Think about products that would fall into each category. Can you come up with a name for each category?

Over time, technological advance increases consumers incomes and reduces the price of smartphones. Each of these forces increases the amount consumers spend on smartphones if the income elasticity of demand is greater tha____________ and if the price elasticity of demand is greater than_____________. a. zero, zero b. zero, one c. one. zero d. one, one

The equation for a demand curve is P=2/Q. What is the elasticity of demand as price falls from 5 to 4? What is the elasticity of demand as the price falls from 9 to 8? Would you expect these answers to be the same?

What is the difference between the demand and the quantity demanded of a product, say milk? Explain in words and show the difference on a graph with a demand curve for milk.

What is the price elasticity of supply? Can you explain it in your own words?

What is the formula for line cross-price elasticity of demand?