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Chapter 5: Q.7 (page 130)
What would the gasoline price elasticity of supply mean to UPS or FedEx?
The products delivered by UPS or FedEx are directly linked to the gasoline price changes as a part of the price elasticity of supply.
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Would you expect supply to play a more significant role in determining the price of a basic necessity like food or a luxury like perfume? Explain. Hint: Think about how the price elasticity of demand will differ between necessities and luxuries.
Why is the supply curve with constant unitary elasticity a straight line?
For each of the following pairs of goods, which good would you expect to have more elastic demand and why?
a. required textbooks or mystery novels
b. Adele recordings or pop music recordings in general
c. subway rises during the next six months or subway rides during the next five years
d. root beer or water
30. In a market where the supply curve is perfectly inelastic, how does an excise tax affect the price paid by consumers and the quantity bought and sold?
What is the formula for the income elasticity of demand?
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