Price elasticity of demand for pancakes

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Problem 1: Suppose that a 12 percent rise in the price of pancakes decreases the quantity of pancakes demanded by 22 percent and increases the quantity of waffles demanded by 14 percent. Calculate the:

a) Price elasticity of demand for pancakes.

b) Cross elasticity of demand for waffles with respect to the price of pancakes

Problem 3: Explain why each the following statements are true or false.

a) As the price of apples fall, demand for apples increases.

b) As income falls, demand for apples may increase or decrease.

c) Given a demand curve, the reason for a down-ward sloping demand curve is that as price goes down, more buyers enter the market.

d) When more suppliers enter the market, the supply curve shifts to the right.

Reference no: EM13798201

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