b. Calculate the price elasticity of demand for frozen orange
juice between the prices of $2.00 and $3.00. Is the
demand elastic or inelastic?
c. Calculate the elasticity of supply for frozen orange juice
between the prices of $2.00 and $3.00. Is the supply
elastic or inelastic?
d. Explain in general what factors would affect the elasticity
of demand for frozen orange juice.
e. Explain in general what factors would affect the elasticity
of supply of frozen orange juice.
14. For each of the following events, state the relevant elasticity
concept. Then compute the measure of elasticity, using average
prices and quantities in your calculations. In all cases, assume
that these are ceteris paribus changes.
a. When the price of movie tickets is reduced from $14.00 to
$11.00, ticket sales increase from 1200 to 1350.
b. As average household income in Canada increases by 10
percent, annual sales of BMWs increase from 56 000 to 67
000.
c. After a major failure of Brazil’s coffee crop sent coffee
prices up from $3.00 per kilogram to $4.80 per kilogram,
sales of tea in Canada increased from 7500 kg per month
to 8000 kg per month.
d. An increase in the world demand for pulp (used in
producing newsprint) increases the price by 14 percent.
Annual Canadian production increases from 8 million
tonnes to 11 million tonnes.
