Question

lesson 3 review
economic reasoning

1. summarizing why do some goods have elastic demand and some goods have inelastic demand?

building social studies skills

1. explaining causes in 2016, the u.s. manufacturer of epipens, life - saving devices for people with allergies, raised the price even though the cost of making the product was not high. why do you think the manufacturer raised the price?
2. determining context is cell phone service in general elastic or inelastic? is cell phone service from a particular carrier elastic or inelastic? explain.
3. analyzing issues if you are one of many vendors selling apples at a farmers’ market and you want to increase revenues, should you raise your prices? why or why not?

writing about economics

1. explanatory writing make a list of three items you or members of your family purchased in the past week. using what you know about demand elasticity, write a paragraph about each item to explain whether your demand for the item you purchased is elastic or inelastic. explain whether or not there are adequate substitutes, whether the purchase might have been delayed, or whether the purchase used a large portion of your income.

collaborating

1. integrating information with a partner, interview a local merchant. ask the following questions and others you think are relevant to learn about a real situation of business sales determining total expenditures: what determines the prices you charge for your products? what determines when you change prices? are there any costs to you of changing prices (such as reprinting price lists)? write a summary of the interview, and present your findings to the class.

Explanation:

1. Goods have elastic demand when consumers are sensitive to price - changes (many substitutes, not essential). Inelastic demand occurs for goods that are necessities with few substitutes.
2. The manufacturer of EpiPens likely raised the price due to market power (lack of competition), high - value to customers (life - saving), and inelastic demand.
3. Overall cell phone service can be inelastic as it's a communication necessity. Service from a particular carrier may be elastic with competition.
4. For apples at a farmers' market, demand is likely elastic. Raising prices may decrease revenues as customers can buy from other vendors.
5. For personal purchases, if an item has substitutes, can be delayed, and is a small part of income, demand is elastic; if not, it's inelastic.
6. Prices are determined by costs, competition, and demand. Costs of changing prices include reprinting. Summary should cover these aspects.

Answer:

1. Goods with many substitutes, non - essential nature have elastic demand. Goods that are necessities with few substitutes have inelastic demand.
2. The manufacturer raised the price likely due to market power and inelastic demand as EpiPens are life - saving and have few substitutes.
3. General cell phone service may be inelastic as it's a necessity, while service from a particular carrier may be elastic due to competition.
4. No, you should not raise prices as demand for apples at a farmers' market is likely elastic and customers can buy from other vendors.
5. Answers will vary based on personal purchases. Analyze based on substitutes, delayability, and income portion.
6. Prices are determined by costs, competition, and demand. Costs of changing prices include reprinting. Write a summary covering these aspects for the class presentation.