A. Define the following **three** terms:

1. Elasticity of demand

2. Cross-price elasticity (include substitutes and complements)

3. Income elasticity (include normal and inferior goods)

B. Explain the elasticity coefficients for *each* of the **three** terms defined in part A.

C. Contrast the terms defined in part A.

1. Explain the significance of differences among the **three** terms you contrasted in part C.

D. Explain whether demand would tend to be more or less elastic for *each* of the following **three** determinants of elasticity demand:

1. Availability of substitutes

2. Share of consumer income devoted to a good

3. Consumer’s time horizon

E. Provide an example for *each* of the **three** determinants in part D.

1. Explain the logical impacts to business decision making that result from *each* of the examples you provided in part E.

F. Differentiate between perfectly inelastic demand and perfectly elastic demand.

1. Illustrate the difference between the terms in part F with specific descriptions or graphs.

G. Explain the relationship between elasticity of demand and total revenue for the following ranges along the demand curve, using the attached “Graphs for Elasticity of Demand, Total Revenue.” Include the impacts to quantity demanded and total revenue when there is a price decrease, ceteris paribus.

1. Elastic range

2. Inelastic range

3. Unit-elastic range

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