Suppose the price elasticity of demand for farm products is elastic.

1. Suppose the price elasticity of demand for farm products is elastic. If federal government wants to follow a policy of increasing income for farmers, what type of programs will the government enact?

2. Suppose a movie theater raises the price of popcorn 10 percent, but customers do not buy any less popcorn. What does this tell you about the price elasticity of demand?. What will happen to total revenue as a result of the price increases?

3. Suppose a university raises its tuition from $3,000 to $3,500. As a result, student enrollment falls from 5000 to 4500. Calculate the price elasticity of demand. Is demand elastic, unitary elastic, or inelastic?

4. Ace Manufacturing produces 100 hammers per day. The total fixed cost for the plant is 5000 per day, and the total variable cost is 15000 per day. Calculate the average fixed cost, average variable cost, average total cost, and total cost at the current output level