Question

1. In this question, you'll have to solve for price elasticity of demand using the percent change formula.

When the old price of a food package was $6.92 per package, the old quantity was 822 packages were sold each day. After the price increased to the new price $10.05 per package, sales dropped to a new quantity of 449 packages per day. Using these numbers, what is the price elasticity of demand for food packages? Round your answer to 3 decimal places.

2. In this question, you'll deal with two goods, and you'll have to solve for cross-price elasticity using the percent change formula.

2A. When the old price of a file cabinet was $1,333 per cabinet, an old quantity of 227 desks were sold. After the price decreased to a new price of $935 per file cabinet, a new quantity of 426 desks were sold. Using these numbers, what is the cross-price elasticity of file cabinets for desks? Round your answer to 3 decimal places.

2B. Based on your answer to the above question, what is the relationship between file cabinets and desks?

A. substitutes

B. complements

C. unrelated goods

Dave's income increases by 23%. As a result, his consumption of burritos increases by 31%.

3A. What is Dave's income elasticity for burritos? Round your answer to three decimal places.

3B. Consider your answer for the previous question. Dave considers burritos to be

A. a normal, necessity good

B. a normal, luxury good

C. an inferior good

D. a substitute good

E. a complement good

F. a sunk cost

4. The price of a combo meal at Lion Restaurant is $5.

When Axel had an old income of $12,000 his old demand for combo meals was Q = 200 - 4P.

When Axel had a new income of $24,000 his new demand for combo meals was Q = 560 - 4P.

What is Axel's income elasticity for combo meals at Lion Restaurant? Round your answer to 2 decimal places if necessary.

Answer 1