Assignment 2

You are required to write an assignment regarding the elasticity.

The following guidelines will assist you:
 Answer the following questions regarding the elasticity.
 In doing so, have always in mind to define the concept of elasticity, compute elasticity and show the impact of government intervention on market outcomes.

1. If the price of gasoline doubled, how would consumption of (a) cars, (b) public transportation, and (c) in-theater movies be affected? How quickly would these adjustments be made?
2. Identify two goods each whose demand exhibits (a) high income elasticity, (b) low income elasticity, (c) high price elasticity, and (d) low price elasticity. What accounts for the differences in elasticity?
3. If you owned a movie theater, would you want the demand for movies to be elastic or inelastic?
4. How has the Internet affected the price elasticity of demand for air travel?

Note: check the chapter 6 please