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- Suppose researchers at the University of Wisconsin discover a new vitamin that increases the milk production of dairy cows. If the demand for milk is relatively inelastic, the discovery willA 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.3. Using the midpoint method The following graph shows two known points (X and Y) on a demand curve for tomatoes. ? 10 9 Demand PRICE Dollars per pound) 0 10 20 30 40 50 00 70 8 100
- If the cross elasticity of demand between bread rolls and cheese is –3,0, this implies that thesegoods areFred 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?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.
- According to the midpoint method, the price elasticity of demand for apples between point X and point Y is approximately which suggests that the demand for apples is between points X and Y.Suppose cigarettes could be purchased for less in neighboring states because cigarette taxes are lower in those states. Group of answer choices Would effect the price elasticity of demand for cigarettes in New York more if the difference in taxes was greater. This would make the price elasticity of demand in New York higher. This would make the price elasticity of demand in New York lower. Would effect the price elasticity of demand for cigarettes in New York less if the difference in taxes was greater.Consider public policy aimed at smoking. Studies indicate that the price elasticity of demand for cigarettes is about 0.5. If a pack of cigarettes currently costs $5 and the government wants to reduce smoking by 30%, 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 5 years 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. 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. Teenagers do not have as much income as adults, so they are more price sensitive.
- A good with no close substitutes is predicted to have relatively inelastic demand, since consumers cannot easily switch to a substitute good if the price of the good were to increase. The price elasticity of demand of a good depends in part on its relative necessity in comparison to other goods. Assume the following goods all have approximately the same price. Which of the goods has the most elastic demand? The price elasticity of demand for a good also depends on how the good is defined. Self-driving cars Access to medicine for individuals with chronic illnesses Using the following table, organize the goods by indicating which you predict to have the most elastic demand, the least elastic demand, and the elasticity of demand that falls somewhere in between. Categories Most Elastic In Between Least Elastic O O Food Produce Strawberries O The price elasticity of demand of a good is also impacted by the defined time horizon. All else equal, the demand for natural gas will tend to be less…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.According to studies undertaken by the U.S. department of agriculture, the price elasticity of demand for cigarettes is about +0.5. Suppose a major brokerage firm advised its clients to buy cigarette stock under the assumption that, if consumer income rise by 50 percent as expected over the next decade, cigarette sales would double. Based on the fundamental economic principles on income elasticity of demand, a reasonable reaction to this investment advice would be?
