Once again, refer to Table in this chapter and answer the following questions:

a. Is the demand for recreation more or less elastic than the demand for clothing?

b. If 10,000 two-liter bottles of Pepsi are currently being demanded in your community each month, and the price increases from $1.90 to $2.10 per bottle, what will happen to quantity demanded? Be specific.

c. By how much would the price of ground beef have to increase (in percentage terms) in order to reduce quantity demanded by 5 percent?

Rent paid out .......................Opportunity cost of:

Interest on loans .................Owner’s land and buildings (rent foregone)

Managers’ salaries ..............Owner’s money (investment income

Hourly workers’ wages .......Foregone)

Cost of raw materials ..........Owner’s time (labor income foregone)