(a)
The elasticity of the given good which is cars or Chevrolets and the reason behind it with respect to the determinant of demand.
Answer to Problem 1P
Cars have elastic demand and Chevrolets have inelastic demand. The determinant of demand which is responsible is availability of substitute's goods.
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:
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.
(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.
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Chapter 6 Solutions
Exploring Economics
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