19. Would you usually expect elasticity of demand or supply to be higher in the short run or in the long run?

Why?

20. Under which circumstances does the tax burden fall entirely on consumers?

21. What is the formula for the income elasticity of demand?

22. What is the formula for the cross-price elasticity of demand?

23. What is the formula for the wage elasticity of labor supply?

24. What is the formula for elasticity of savings with respect to interest rates?

Critical Thinking Questions

25. Transatlantic air travel in business class has an estimated elasticity of demand of 0.62, while transatlantic

air travel in economy class has an estimated price elasticity of 0.12. Why do you think this is the case?

26. What is the relationship between price elasticity and position on the demand curve? For example, as you

move up the demand curve to higher prices and lower quantities, what happens to the measured

elasticity? How would you explain that?
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