1. Jerry emailed former introductory microeconomics students and offered to pay $40 for their used texts. He got 12 replies from students offering to sell him their books. Mai emailed the same students offering to pay $50. She received 18 offers to sell. What is the price elasticity of supply for used texts in this small market? Show your calculations. (Reminder Use the midpoint technique when calculating the percent changes.)
2. The price of tickets to see Moosehead hockey games in Halifax is increased by 20% and attendance at SMU Huskie hockey games increases as a result by 6%.
(a What is the cross price elasticity of demand for SMU hockey with respect to the price of Moosehead games? Show your calculations. (Note: You don't need to use the midpoint technique in this case for the calculation of the cross price elasticity. Simply use the percent changes as given.)
(b Did the demand for SMU hockey change?
(c Did the demand for Moosehead hockey change?
3. In the United States, 2007 was a bad year for growing wheat. And as the wheat supply decreased, the price of wheat rose dramatically, leading to a lower quantity demanded (a movement along the demand curve). The accompanying table describes what happened to pnces and the quantity of wheat demanded.
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2006
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2007
2.0 billion
$4.26
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Quantity demanded (bushels)
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2.2 billion
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Average price (per bushel)
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$3.42
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Quantity demanded (bushels) 2.2 billion
Average price (per bushel) $3.42
(a) Using the midpoint method calculate the price elasticity of demand for wheat.
(b) What was the total revenue for US. wheat farmers in 2006 and 2007? (Revenue = P x Q)
(c) Did the bad harvest increase or decrease the total revenue of U.S. wheat farmers. How could you have predicted this from your answer to part (a)?
4. If the True North Café's only close competitor the Sunset Café closes down what will happen to the price elasticity of demand for the True North Café food services? Explain in a few words.
5. Khalid drives his car up to the gas pumps with the firm intentions of buying 30 litres of gas whatever is the price. What is his price elasticity of demand for gas? Demonstrate your answer with some calculations. (Hint: How price sensitive or price responsive is Khalid in this case? If the price is 5% higher than he expected what will happen?)
6. Larry drives his car up to the gas pumps with the firm intention of buying $40 worth of gas whatever is the price. What is his price elasticity of demand for gas? Demonstrate your answer with some calculations. (Hint: How price sensitive or price responsive is Larry in this case? If the price is 5% higher than he expected what will happen?)
7. A small province has a minimum wage of $12 per hour and the quantity demanded of minimum wage work or employment is 20 million hours. It proposes to increase the minimum wage by 10% to $13.20 and you have estimated that the price elasticity of demand for minimum wage work or employment is 4.30.
a) What are the total wages paid to minimum wage workers before the increase? (Total wages paid = wage rate x number of hours worked)
b) What will be the percent change in the quantity demanded of minimum wage work if the minimum wage is increased by 10%? Show your calculation.
c) What will be the number of hours of employment for minimum wage workers if the minimum wage is increased?
d) What will be the total wages paid to minimum wage workers after the increase in the minimum wage rate? (Total wages = wage rate x number of hours worked)
e) Would the negative aspect of the proposal for minimum wage workers be a concern if the price elasticity of demand were 0.85? Explain in a few words.
Attachment:- economicsassignment.pdf