Application of elasticities

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Assignment:

If the price of milk increases by 20% and the quantity of milk demanded decreases by 4%, answer:

Calculate the price elasticity of demand. ls demand elastic, inelastic, or unitary? Explain your answer.

Will this product have an easy or hard to find substitute? Why?

The quantity demanded for product A increases by 8% when the price of product B increases by 16%, other variables being the same.

Calculates the cross elasticity of demand . Products A and B, are they complementary or substitutes? Why?

By drawing a graph, show the change in the demand curve for product A as a result of the change in the price of product B.

Can it be possible that for a particular product the demand curve is perfectly inelastic, regardless of price? Explain your answer in detail.

Consider the relationship between the demand for the following products: vodka and grains.

What happens to the demand for vodka when the price of grains increases?

Are these products complementary or are they substitutes? Explain your answer.

A company increases the price of its product from $210 to $240 per unit and stocks 30,500 units of this product monthly.

ls elasticity elastic, inelastic, perfectly inelastic, or unitary? Why? Indicate what could be an example of this product. Why?

Reference no: EM133231814

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