(a)
The elasticity of the given good which is cars or Chevrolets and the reason behind it with respect to the determinant of

Answer to Problem 1P
Cars have elastic demand and Chevrolets have
Explanation of Solution
The good which have more substitutes will be more inelastic and the one with less substitutes is more elastic. Cars have less close substitutes so it will have elastic demand and Chevrolets have more substitutes likes Ford, Suzuki so it will have inelastic demand.
Here, the responsible determinant will be availability of substitute's goods.
Concept Introduction:
(b)
The elasticity of the given good which is salt or housing and the reason behind it with respect to the determinant of demand.

Answer to Problem 1P
Housing will have elastic demand and Salt will have inelastic demand. The determinant of demand which is responsible is Nature of Commodity.
Explanation of Solution
Salt is the necessity good and if its price increases, the demand would not change because it does not have any substitute so it has inelastic demand. Housing will have elastic demand because its price change will have huge effect on demand.
Here, the responsible determinant will be Nature of Commodity.
Concept Introduction:
Elasticity of demand is the measure of change of responsiveness in the quantity demanded due to change in the price. It can be represented as the ratio of percentage change in quantity demanded and percentage change in the price. It implies that how the behavior of people change due to change in the price.
(c)
The elasticity of the given good which is New York Met games or a Cleveland Indians Games and the reason behind it with respect to the determinant of demand.

Answer to Problem 1P
New York met games will have elastic demand and Cleveland games will have inelastic demand. The determinant of demand which is responsible is proportion of Income spent on a Commodity.
Explanation of Solution
New York met games will be cheaper as they are played locally. So this good will have elastic demand. Cleveland games will require the travel cost also. Hence, they have inelastic demand.
Here, the responsible determinant will be proportion of Income spent on a Commodity.
Concept Introduction:
Elasticity of demand is the measure of change of responsiveness in the quantity demanded due to change in the price. It can be represented as the ratio of percentage change in quantity demanded and percentage change in the price. It implies that how the behavior of people change due to change in the price.
(d)
The elasticity of the given good which is Natural gas this month or over the course of the year and the reason behind it with respect to the determinant of demand.

Answer to Problem 1P
Natural gas this month will have inelastic demand and for over the course of year will have elastic demand. The determinant of demand which is responsible is Time adjustment factor.
Explanation of Solution
Natural gas for over the course of year will have more time to adjust and find more substitutes. Hence, demand will be elastic and natural gas this month will have inelastic demand.
Here, the responsible determinant will be Time adjustment factor.
Concept Introduction:
Elasticity of demand is the measure of change of responsiveness in the quantity demanded due to change in the price. It can be represented as the ratio of percentage change in quantity demanded and percentage change in the price. It implies that how the behavior of people change due to change in the price.
Want to see more full solutions like this?
Chapter 6 Solutions
EXPLORING ECONOMICS
- not use ai pleasearrow_forward• Prismatic Cards: A prismatic card will be a card that counts as having every suit. We will denote, e.g., a prismatic Queen card by Q*. With this notation, 2.3045 Q would be a double flush since every card is a diamond and a heart. • Wild Cards: A wild card counts as having every suit and every denomination. Denote wild cards with a W; if there are multiple, we will denote them W₁, W2, etc. With this notation, W2 20.30054 would be both a three-of-a-kind (three 2's) and a flush (5 diamonds). If we add multiple wild cards to the deck, they count as distinct cards, so that (e.g.) the following two hands count as "different hands" when counting: W15 5Q and W255◊♡♡♣♣ In addition, 1. Let's start with the unmodified double-suited deck. (a) Call a hand a flush house if it is a flush and a full house, i.e. if all cards share a suit and there are 3 cards of one denomination and two of another. For example, 550. house. How many different flush house hands are there? 2. Suppose we add one wild…arrow_forwardnot use ai pleasearrow_forward
- In a classic oil-drilling example, you are trying to decide whether to drill for oil on a field that might or might not contain any oil. Before making this decision, you have the option of hiring a geologist to perform some seismic tests and then predict whether there is any oil or not. You assess that if there is actually oil, the geologist will predict there is oil with probability 0.85 . You also assess that if there is no oil, the geologist will predict there is no oil with probability 0.90. Please answer the two questions below, as I am trying to ensure that I am correct. 1. Why will these two probabilities not appear on the decision tree? 2. Which probabilities will be on the decision tree?arrow_forwardAsap pleasearrow_forwardnot use ai pleasearrow_forward
- not use ai pleasearrow_forwardIn this question, you will test relative purchasing parity (PPP) using the data. Use yearly data from FRED website from 1971 to 2020: (i) The Canadian Dollars to U.S. Dollar Spot Exchange Rate (ER) (ii) Consumer price index for Canada (CAN_CPI), and (iii) Consumer price index for the US (US_CPI). Inflation is measured by the consumer price index (CPI). The relative PPP equation is: AE CAN$/US$ ECAN$/US$ = π CAN - πUS Submit the Excel sheet that you worked on. 1. First, compute the percentage change in the exchange rate (left-hand side of the equation). Caculate the variable for each year from 1972 to 2020 in Column E (named Change_ER) of the Excel sheet. For example, for 1972, compute E3: (B3-B2)/B2). ER1972 ER1971 ER 1971 (in Excel, the formula in cellarrow_forwardnot use ai pleasearrow_forward
- 8. The current price of 3M stock is $87 per share. The previous dividend paid was $5.96, and the next dividend is $6.25, assuming a growth rate of 4.86% per year. What is the forward (next 12 months) dividend yield? Show at least two decimal places, as in x.xx% %arrow_forwardJoy's Frozen Yogurt shops have enjoyed rapid growth in northeastern states in recent years. From the analysis of Joy's various outlets, it was found that the demand curve follows this pattern: Q=200-300P+1201 +657-250A +400A; where Q = number of cups served per week P = average price paid for each cup I = per capita income in the given market (thousands) Taverage outdoor temperature A competition's monthly advertising expenditures (thousands) = A; = Joy's own monthly advertising expenditures (thousands) One of the outlets has the following conditions: P = 1.50, I = 10, T = 60, A₁ = 15, A; = 10 1. Estimate the number of cups served per week by this outlet. Also determine the outlet's demand curve. 2. What would be the effect of a $5,000 increase in the competitor's advertising expenditure? Illustrate the effect on the outlet's demand curve. 3. What would Joy's advertising expenditure have to be to counteract this effect?arrow_forwardThe Compute Company store has been selling its special word processing software, Aceword, during the last 10 months. Monthly sales and the price for Aceword are shown in the following table. Also shown are the prices for a competitive software, Goodwrite, and estimates of monthly family income. Calculate the appropriate elasticities, keeping in mind that you can calculate an elasticity measure only when all other factors do not change (using Excel). For example, price elasticities, months 1-2. Month Price Aceword Quantity Aceword Family Income Price Goodwrite 1 $120 200 $4,000 $130 21 120 210 4,000 145 3 120 220 4,200 145 4 110 240 4,200 145 90 5 115 230 4,200 145 6 115 215 4,200 125 10 7899 115 220 4,400 125 105 230 4,400 125 105 235 4,600 125 105 220 4,600 115arrow_forward
- Exploring EconomicsEconomicsISBN:9781544336329Author:Robert L. SextonPublisher:SAGE Publications, IncEconomics Today and Tomorrow, Student EditionEconomicsISBN:9780078747663Author:McGraw-HillPublisher:Glencoe/McGraw-Hill School Pub CoEssentials of Economics (MindTap Course List)EconomicsISBN:9781337091992Author:N. Gregory MankiwPublisher:Cengage Learning
- Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning




