Paper Details
Details: Suppose you are a painter, and the price of a gallon of paint increases from $3.00 a gallon to $3.50 a gallon. Your usage of paint drops from 35 gallons a month to 20 gallons a month. Perform the following:
Compute the price elasticity of demand for paint and show your calculations.
Decide whether the demand for paint is elastic, unitary elastic, or inelastic.
Using demand and supply curves, show the effect of each of the following on the market for cigarettes:
a. A cure for lung cancer is found.
b. The price of cigars increases.
c. Wages increase substantially in states that grow tobacco.
d. A fertilizer that increases the yield per acre of tobacco is discovered.
e. There is a sharp increase in the price of matches, lighters, and lighter fluid.
f. More states pass laws restricting smoking in restaurants and public places.