Answer any 4 of the following 12 questions and submit your completed work on ManageBac:
- Provide the general definition of elasticity and discuss its importance.
- What are the general and midpoint formulas for price elasticity of demand.
- Discuss the terminology associated with elasticity.
- What is the connection between price changes and revenue changes that is revealed using elasticity.
- Explain the factors that affect the degree of price elasticity of demand.
- Explain income and cross elasticities.
- Introduce the formula for price elasticity of supply and discuss the appropriate terminology.
- Outline the factors affecting the degree of price elasticity of supply.
- Tax revenues (or collections) are the product of a tax base and a tax rate. However, tax bases are usually inversely related to tax rates. Discuss whether tax rates should be increased or decreased to increase tax collections. Talk about the various ways to reduce the federal government's budget deficit.
- Use demand elasticity to discuss whether tuition should be increased or decreased to raise college revenue so that professors may receive large pay increases.
- Can firms affect the degree of relative elasticity in order to mitigate the adverse effects of possible price increases? Can advertising create enough product differentiation to reduce the number of substitutes consumers think exist for the product?
- Review the formulas for price elasticity of supply and demand. Show that price elasticity is more than just the slope of the demand and supply curves.