10.Consider the following table based on the article "The effect of prices on nutrition: Comparing theimpact of product- and nutrient-specific taxes" by Matthew Harding and Michael Lovenheim in the Journal ofHealth Economics (53: 53-71).GoodStrawberriesWatermelonsCarrotsa.Price Elasticity ofDemand- 1.128-0.830- 1.379C.Which of the above are normal goods? How do you know?b. If average income decreases by 5 percent, calculate the change in demand for strawberries:The demand for (circle the correct answer):Strawberries isWatermelons isIncomeElasticities1.6251.1340.943Carrots isd. Strawberries and (circle the correct answer:Watermelons areCross Price Elasticity withStrawberries1Carrots are-0.0580.025Elastic / InelasticElastic / InelasticElastic / InelasticSubstitutes/complementsSubstitutes/ complements

The quantity demanded of one good/product in response or as a result to an increase or decrease in…

Answered: 10. Consider the following table based…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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question # 2 and 14
Define Elasticity in your own words and also explain how elasticity can be measured?
What is the nature of elasticity?
Data from the Bureau of Labor Statistics shows that U.S. income increased by 10% while consumer data shows that the quantity demanded of organic lemonade drinks changed from 80 to 85. Compute the income elasticity for organic lemonade drinks, is organic lemonade a normal or an inferior good?
Someone tells you the "absolute value" of the cross price elasticity of two substitutes like Coke and Pepsi is 2.40. Based on this information, what percent change in the price of Coke will cause the quantity demanded of Pepsi to increase by 3%.
The Concept of Elasticity Explain the general concept of elasticity and how it can be applied to improve the decisions made about a product.(+- ¼ page)
Describe and briefly explain the importance of the concept of elasticity.
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.
The accompanying table lists the cross-price elasticities of demand for several goods, where the percent quantity change is measured for the first good of the pair, and the percent price change is measured for the second good. ( please see image) a. Explain the sign of each of the cross-price elasticities. What does it imply about the relationship between the two goods in question? b. Compare the absolute values of the cross-price elasticities and explain their magnitudes. For example, why is the cross-price elasticity of McDonald’s burgers and Burger King burgers less than the cross-price elasticity of butter and margarine? c. Use the information in the table to calculate how a 10% increase in the price of Pepsi affects the quantity of Coke demanded. d. Use the information in the table to calculate how a 5% decrease in the price of gasoline affects the quantity of SUVs demanded.
b. Studies indicate that the price elasticity of demand for cigarettes is about -0.2. If a pack of cigarettes currently costs $4, and the government wants to reduce smoking by 25 percent, by how much should it increase the price?
If price elasticity of supply of a good = 1.45 , how do you interpret this? If price elasticity of supply of a good = 0.45 , how do you interpret this? If price elasticity of supply of a good = 1.00 , how do you interpret this?
Suppose that the price elasticity of demand for a packet of cigar is -0.85 and the price elasticity of supply is 1.5 at market equilibrium. As a result of an increase on sales tax, the new equilibrium price rises by 15%. (a) What is the percentage change in quantity demanded of cigar? Show your calculation.

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