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Assignment:
1. The Elsewhere Gift Shop sells items it imports from Europe. Its inventory includes clocks, hand-made linens, ornaments, and jewelry. Elsewhere sells one of the German nutcrackers it carries for $47. Demand for the clock at this price is 72, and the demand curve has a constant elasticity of -1.5. Given this information, what will the demand for the nutcracker be at a price of $50?
2. One of Muddabber Potterys most popular items is a brie baker. When Mr. Swayze, the owner of the pottery, used it as a promotion, he gave away 873 of the bakers. Sales are 343 units at the current price of $25. Assuming linear demand, what will be the new level of sales if Mr. Swayze increases the price of the brie bakers to $28?
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