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Question 3 Advocates of small government complain that two proposed government programs will steal the market from small busi

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Answer #1

Pt 4,53

If the demand elasticity of bread is highle inelastic, it means the effect of chage in price on demand of bread will be insignifucant. Hence if a progrm fotsters major increase in government production of bread, the prices of bread may get down. As law of demand states with lower price demand will be higher of government made bread. But as the demand is inelastic, there will be no significant effect on demand of bread of small business producing bread.

On other hand, If the demand elasticity of manicure is highly elastic, it means the effect of chage in price on demand of manicure will be significant. Hence if a progrm that will increase in government production of manicures, the prices may get low. With lower price demand will be higher of government made manicure. And as the demand is highly elastic, there will be sevre significant effect on demand of manicure of small business producing manicure.

Thus the second program worries small government proponents the most.

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