For each of the following scenarios, decide whether you agree or disagree and explain your answer.
a. if the elasticity of demand for cocaine if -.2 and the DEA succeeds in reducing the supply substantially, causing the street price to rise by 50%, buyers will spend less on cocaine.

b. every year christmas tree vendors bring 10s of 1000s of trees to new york city and boston. during the last 2 years, the market has been very competitive, as a result, price has fallen by 10%. if the price elasticity of demand was -1.3, vendors would lose revenues altogether as a result of the price decline.

c. if the demand for a good has unitary elasticity, or elasticity is -1, it is always true that an increase in its price will lead to more revenues for sellers taken as a whole.

Answer rating: 100% (QA)

a Agree Elasticity of demand 02 It means for 1 increase ... View the full answer