Answer Happy

Question 5 a. Using the table below which outlines the price and quantity demanded of three goods, calculate the following: Lobster Cereal P1 2.50 9.00 P2 1.45 12.00 Q1 30 40 Q2 65 25 Orange Juice 4.45 6.75 150 125 i. The price elasticity of demand for lobster (4 marks) ii. The cross-price elasticity of cereal with respect to orange juice (4 marks) b. Transport operators in Belize received permission to increase their fares 15 percent, and they anticipated that revenues would increase by about 15 percent. When the 15 percent increase was enacted revenues increased by only about 5 percent. What can you infer about the elasticity of demand for transportation? What were operators assuming about the elasticity of demand? (3 marks)