Refer to Table in this chapter and answer the following questions:

a. Which is more elastically demanded: cigarettes or pork? Does this make sense to you? Explain briefly.

b. If the price of milk rises by 5 percent, what will happen to the quantity demanded? (Be specific.)

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)