# Elasticity

### Practice Problems for Elasticity

Problem : 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 : 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 : 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 : If supply is unit elastic and demand is inelastic, a shift in which curve would affect quantity more? Price more?

Problem : Katherine 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. 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?

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