Question 1. It has often been said that craft unions (electricians, carpenters, etc.) possess considerably greater power to raise wages than do industrial unions (automobile workers, steel workers, etc.). How would you explain this phenomenon in terms of demand elasticity?
Question 2. What would you expect to happen to spending on food at home and spending on food in restaurants during a decline in economic activity? How would income elasticity of demand help explain these changes?
Question 3. The following relations describe the supply and demand for posters.
Q? = 65,000 – 10,000P and Qs = -53,000 + 15,000P
Where Q is the quantity and P is the price of a poster, in dollars.
a. Complete the following table.
b. What is the equilibrium price?
c. Graph
Price Qs Q? Surplus or Shortage
$6.00
5.00
4.00
3.00
2.00
1.00