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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