Question 1. Concession stands at movie theatres charge high prices for popcorn, drinks and other refreshments. this pricing increases total revenue. What does that imply about the price elasticity of demand for refreshments in movie theatres? What theatre policy helps make this demand elastic or inelastic?
Question 2. If your manager offers you a 20% raise, and in response you work 10% more hours, how would you describe your price elasticity of labour supply? Are these smart choices for both of you? Explain your answer.
Question 3. Explain the relationships between who pays a sales tax and elasticities of demand and supply.
Question 4. Gov't use sales taxes both to collect revenue and to change behaviour. If cigarette taxes are intended to discourage smoking rather than raise revenue, what elasticities of supply and demand for cigarettes will help gov't achieve this policy objective? How do those elasticities compare to the elasticities that give gov't the most tax revenue?