1. Explain using a supply and demand curve the effects of an increase in minimum wage. According to U.S. Department of Labor, effective July 24, 2009, the national minimum wage was $7.25/ hour; therefore, research the current minimum wage rate on the labor market, identify the number of workers in the labor force in July 2009 and October 2014 to illustrate your conclusions.
2. The price elasticity of demand is 08, calculate the percentage change in quantity demand if the price of cigarettes per pack rose from $5.50 to $6.50
Use the formula for Price Elasticity of Demand.
3. Calculate the price elasticity of demand given a 20% increase in price and 40% decrease in quantity demanded.
Would the good be considered as elastic, unitarily elastic, or inelastic in demand? Please explain.
Use the price elasticity of demand formula.
4. A local movie theater owner decided to increase his ticket prices from $8.50 to $10.00, as a result the quantity of ticket sold per week as decreased from 1,000 tickets to 800 tickets, calculate the price elasticity of demand using the point elasticity of demand formula. Do consumers have an elastic, inelastic, or unitarily elastic demand for theater tickets? Please explain.