ECON 1 – 1

EXERCISE ON CHAPTER THREE

Name: _________________________________________________ Score: _______________

Subject & Section: _______________________________________ Date:_______________

Computation: Show your solutions and give your conclusions.

A. Problem Solving:

1. Beef sells at a price of P300 per kilo. An increase in its price by 5% causes your demand
to decrease from 5 to 3 kilos a week. (PED)

2. The quantity demanded for pork rises from 100 to 150 kilos when price falls from P200
to P180 per kilo. (PED)

3. Cherry Ann has just received a P5000 increase in her salary, it’s give her a total of
P15000 per month. With this higher purchasing power, she can now afford to buy shoes
thrice a year instead of her previous twice a year. (IED)

4. An increase in the price of Emperador from P80 to P90 cause the quantity demanded for
Lime Juice to decrease by 10% from the level of 300 units. (CED)

5. A decrease in the price of Tanduay from P95 to P90 causes the quantity demanded for
Emperador to decrease by 10% from the level of 200 units. (CED)

B. Compute for the cross elasticity of the following goods:

Determine whether the goods are substitutes or complementary.

A Set of Goods

Before After
Good
Price/Unit Quantity Price/Unit Quantity

Personal Computer (B) 60,000 25,000 40,000 30,000

Operating System (A) 30,000 7,000 8,000 12,000