Question 1. If the price of jeans rises and the quantity sold also rises, does this mean that the demand curve slopes upward? Why or why not?
Question 2. If the prices of most goods are rising by an average of 15 percent per year, but the price of gasoline rises just 10 percent per year, what is happening to the real prices of gasoline and how would one expect consumers to react in adjusting their market basket of goods?
Question 3. Suppose a producer raises the price of a good from $4 to $7, and the quantity sold drop from 250 to 200 units. Is the demand for the good elastic or inelastic? What is the precise coefficient of the price elasticity of demand in this case?
Question 4. If the government subsidizes flood insurance, what will happen to the price of that insurance? What will happen to the value of the property that may be lost due to flooding? Why?