a. Using the midpoint cui b. If the price of coffee decreased from $8 to $6, the

Question

a. Using the midpoint cui b. If the price of coffee decreased from $8 to $6, then usilg h what would be the price elasticity of demand for coffee? 5. At the equilibrium price and equilibrium quantity a. What is the price elasticity of demand? (Use the midpoint method and estimate the price elasticity of demand for a price movement from the price one dollar below the equilibrium price to one dollar above the equilibrium price What is the price elasticity of supply? (Use the midpoint method and estimate the price elasticity of demand for a price movement from the price one dollar below the equilibrium price to one dollar above the equilibrium price.) If a small tax is imposed on each cup of coffee sold, will the buyer or seller b. c. bear more of the burden? If a $3 tax is imposed on the seller: What is the new equilibrium price and d. quantity? What is the incidence of the tax? 6. Explain whether demand for each of the following products is likely clastie or inelastic a. Houses in Takoma Park b. Baking soda c. Table salt d. Turkish pink sea salt e. Staplers f. Swingline staplers g. Car tires h. Frozen pad thai i. 2017 Honda Civic EX j. flu vaccine

Explanation / Answer

(Question 5 - Demand and Supply data are missing)

(Question 6)

A good is elastic when, corresponding to a N% increase (decrease) in its price, its quantity demanded decreases (increases) by more than N%. A good is inelastic when, corresponding to a N% increase (decrease) in its price, its quantity demanded decreases (increases) by less than N%. Therefore,

(a) Houses in Takoma Park - Elastic

[Since purchase of a house comprises a big proportion of consumers' budget, and there are substitute houses available elsewhere, its demand is highly price-sensitive and so, elastic]

(b) Baking soda - Inelastic

[Since purchase of baking soda comprises a small proportion of consumers' budget, and it has few substitutes, its demand is not much price-sensitive and so, inelastic]

(c) Table salt - Inelastic

[Since purchase of table salt comprises a small proportion of consumers' budget, and it has few substitutes, its demand is not much price-sensitive and so, inelastic]

(d) Turkish pink sea salt - Inelastic

[Since Turkish pink sea salt is an exquisite item with very low substitutes, its demand is not much price-sensitive and so, inelastic]

(e) Staplers - Inelastic

[Since staplers do not have perfect substitutes, its demand is not much price-sensitive and so, inelastic]

(f) Swingline Staplers - Elastic

[Since Swingline staplers have substitutes from other brands of staplers, its demand is highly price-sensitive and so, elastic]

(g) Car tires - Inelastic

[Since car tires do not have substitutes, its demand is not much price-sensitive and so, inelastic]

(h) Frozen pad thai - Inelastic

[Since this is an exquisite item with very low substitutes, its demand is not much price-sensitive and so, inelastic]

(i) 2017 Honda Civic - Elastic

[Since Honda Civic car model have substitutes from other brands of cars, its demand is highly price-sensitive and so, elastic]

(j) Flu vaccine - Inelastic

[Since a vaccine is a medical necessity, its demand is not price-sensitive and therefore, inelastic].

NOTE: As per Chegg Answering Policy, first question has been answered.

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