Microeconomics ASSIGNMENT

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The tables below show the cumulative demand for 12 ounce cans of Coca-Cola as provided by students in a previous class.

Original		Income Doubles		Pepsi is $.20 cheaper than Coke
Price	950	200	Avg.		Price	950	200	Avg.	Price	950	200	Avg.
$1.50	54	26	40		$1.50	87	40	64	$1.50	44	20	32
$1.25	63	30	47		$1.25	100	46	73	$1.25	55	27	41
$1.00	83	36	60		$1.00	125	56	91	$1.00	67	35	51
$0.75	115	53	84		$0.75	175	82	129	$0.75	92	48	70
$0.50	160	75	118		$0.50	241	106	174	$0.50	140	70	105

1. Using the “Avg.” column in the first table calculate self-price elasticity assuming the price of Coke increases from $1.00 to $1.25 per can (use the mid-point formula).

2. Using the first table and the second table (the “Avg. columns) calculate the income elasticity for Coke assuming income doubles and the price is $1.00 per can (again, use the mid-point formula). No matter what level of income you have, if you double it the percent change in income (when using the mid-point formula) will always be 66.7%. So, 66.7% will be your denominator.

3. Using the first table and the third table (the “Avg. columns) calculate the cross-price elasticity of demand for Coke assuming that table one shows the demand for Coke when the price of Coke is $1.00 per can and the price of Pepsi is $1.00 per can, and that table three shows the demand for Coke when the price of Coke is $1.00 per can and the price of Pepsi is $.80 per can (again, use the mid-point formula).