Chapter 18 study questions 5, 6, 11, and 16
5. The major determinants of price elasticity of demand are substitutability, proportion of income, luxuries versus necessities and time. A.) elastic b.) Inelastic c.) elastic d.) inelastic e.) elastic f.) inelastic
6. The effect of price elasticity of demand on if there was a rule stating that students had to live in dorms would make dorm room demand go from an inelastic to elastic. Because all students would be occupying the dorms a price would move in the same direction as demand. The rule would drive room rates up because it would increase revenue and since it is elastic the price increase would have no effect on demand.
11. The cross elasticity between the price of beer and the use of marijuana is negative. These products are complimentary goods and the logic behind this is that some people that drink beer smoke marijuana. So the increase in the price of beer would reduce the amount consumed and therefore effect marijuana because it is a complimentary good to beer.
16.) The purpose of charging different groups of costomers different prices is to increase revenue and also give elastic costumers an oppurtnity to buy there goods. Two examples of my own would be amusement parks, and grocery stores (ie, suburb areas v.s. lower income areas. and then there were two and then there were two. asnd aksdjf asdljkfasjdfja asdlkjf asdjflaskd alskdjfa sdfkljasdf asdlkjf asdkjfaklsdjf aklsjdfkajsd aksdjfalksj alskdjfaksljdf askldjfaksjdf aslkdjfaskjf alskjdfalksjf lkajsfkajsfd klasdjf saslkdjf asd aksdjfa sd;klj asdklfja sdlkfjasd faskljfa aklsjdfa aksjdf;a s aksjdf ;alsdasldkjfa&n ...