Chapter 6, Problem 10P

To determine

To Explain:

The following observations using the concept of elasticity.

1. During the period of economic boom, the number of business entities such as personal care increases proportionately greater than the number of other new ventures.
2. Cement is the key building material in Mexico. After the introduction of a new technology that has resulted in the cost of producing cement cheaper, the supply curve for the Mexican cement industry has become relatively flatter.
3. Some products that were once regarded as luxuries like a telephone are now regarded as virtual necessities. Because of this, the demand curve for telephone services has become steeper over time.
4. Consumers in a less developed country spend proportionately more amount of their income on equipments for producing things at home than consumers in a more developed country.

Concept Introduction:

Elasticity:

This is a concept that measures the degree of responsiveness of the quantity demanded or supplied in response to price or other determining factors like income.