Changes

===Honors===

===Honors===

No essay this week.  Instead, complete all of the following challenging problems:

No essay this week.  Instead, complete all of the following problems:

9.  The greater the number of substitutes for a good, is it more or less price elastic?  Explain.

8.  The greater the number of substitutes for a good, is it more or less price elastic?  Explain briefly.

10.  The smaller the proportion of income consumed by the purchase of a good, is it more or less income elastic?  Explain.

9.  The smaller the proportion of income consumed by the purchase of a good, is it more or less income elastic?  Explain briefly.

11.  Would government prefer taxing a good that is price elastic or price inelastic?  Explain.

10.  Would government prefer taxing a good that is price elastic or price inelastic?  Explain briefly.

12.  Calculate the income elasticities for the two goods in question 4.

11.  Calculate the income elasticities for the two goods in question 4, making any assumptions you feel are necessary.

13.  Suppose french fries cost $1 and ketchup 10 cents.  When the price of ketchup goes up to 20 cents, the quantity demanded for french fries falls by 10%.  What is the cross elasticity of demand for french fries with respect to ketchup?  Show your work and make any assumptions you feel are necessary.

12.  Suppose french fries cost $1 and ketchup 10 cents.  When the price of ketchup goes up to 20 cents, the quantity demanded for french fries falls by 10%.  What is the cross elasticity of demand for french fries with respect to ketchup?  Show your work and make any assumptions you feel are necessary.

[[Category:Economics lectures]]

[[Category:Economics lectures]]

{{DEFAULTSORT: Economics Lecture 05}}

{{DEFAULTSORT: Economics Lecture 05}}