Business 620 Critical Thinking Two Salvatore’ s Chapter 4: Discussion Questions: 8 and 10, 11. Problems: 3( a) and( b), 7, 9, and 14, 15. Froeb et al.’ s Chapter 6: Individual problems: 6-1, 6-3, and 6-5. Salvatore’ s Chapter 5: Problems: 8, 15( b) and( c), and appendix problem 2( p. 215).
Discussion Question 8: If the price increase by 10 percent by how much does the quantity of household
a) natural gas and
b) electricity change in the short run and the long run?( Hint: use the price-elasticity values).
Discussion Question 10: Agricultural commodities are known to have a price-inelastic demand and to be necessities. How can this information allow us to explain why the income of farmers falls
a) After a good harvest? b) In relation to the incomes in other sectors of the economy? Discussion Questions: 11.
Suppose that the cross-price elasticity of demand between McIntosh and Golden Delicious apples is 0.8 between apples and apple juice is 0.5 between apples and cheese is-0.4 and between apples and beer is 0.1 what can you say about the relationship between each set of commodities