Question

ELASTICITY OF DEMAND HOMEWORK ASSIGNMENT Pick ten (10) specific items of clothing (“white, button-down, fitted, frilly blouses, moderately priced” and not “blouses”) that you regularly purchase and/or have purchased in the last thirty days. [Not shoes, jewelry, or handbags.] For each of the items, describe the item, and then answer the following three questions, explaining your answers in detail. (You should have thirty answers. Please type your answers or write very clearly.) What is your price elasticity of demand for each of these items of clothing? Visualize price going up 25 percent, and your response. [Your choices are: perfectly elastic, very elastic, mildly elastic, unitary elastic, inelastic, very inelastic, perfectly inelastic.] Explain why? Be specific in your explanation. What is your income elasticity of demand for each item of clothing? Visualize your income going up 25 percent, and your response. [Your choices are: high income elastic, unit income elastic, low income elastic, zero income elastic, negative income elastic.] Explain why? Be specific. What is your cross price elasticity of demand for each item of clothing? Pick another, related good (some substitutes and some complements) and visualize its price going up 25 percent, and your response with your original item. [Your choices are: perfectly elastic (positive number), very elastic (large positive number), elastic (small positive number), zero cross elastic, inelastic (small negative number), very elastic (large negative number), perfectly elastic (negative number).] Explain why? Be specific.

Answer 1