What is the elasticity of demand? Assuming that the elasticity of demand is constant, how many would she sell if the price were $10 a box?

Problem (1). Yesterday, the price of envelopes was $3 a box, and Julie was willing to buy 10 boxes. Today, the price has gone up to $3.75 a box, and Julie is now willing to buy 8 boxes. Is Julie’s demand for envelopes elastic or inelastic? What is Julie’s elasticity of demand? Problem (2). If Neil’s elasticity of demand for hot dogs is constantly 0.9, and he buys 4 hot dogs when the price is $1.50 per hot dog, how many will he buy when the price is $1.00 per hot dog? Problem (3). Which of the following goods are likely to have elastic demand, and which are likely to have inelastic demand? Home heating oil, Pepsi, Chocolate, Water, Heart medication, Oriental rugs. Problem (4). If supply is unit elastic and demand is inelastic, a shift in which curve would affect quantity more? Price more? Problem (5). Jennifer advertises to sell cookies for $4 a dozen. She sells 50 dozen, and decides that she can charge more. She raises the price to $6 a dozen and sells 40 dozen.

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