**I**. Bellwork (Show Your calculations)

The local smoothie shop sells smoothies for $6.00 each. Doing so, they have sold 1500 smoothies a week for the past year. The shop decides to raise the price to $6.90 and the sales of smoothies drop to 1200 per week.

A. Using the midpoint formula, calculate the elasticity of demand for smoothies and determine whether it is elastic, inelastic, or unit elastic.

B. Using the total revenue test determine the elasticity of demand.

II. Objectives:

- Measure the responsiveness of demand to changes in the prices of substitutes and complements
- Analyze how normal and inferior goods are impacted by income elasticity of demand.
- Explain the significance of the price elasticity of supply and identify situations the influence supply elasticity.
- Evaluate various explanations for changes in elasticity and determine which explanation best accords with textual evidence,

III. Discussion: Other Price Elasticities Pages 477-482

A. Cross Price Elasticity – Substitutes and Complements

B. Income Elasticity of Demand

- +Normal Good
- -Inferior Good
- Income elastic >+1
- Income inelastic <1

C. Price Elasticity of Supply

- Determinants of Supply Elasticity

- Availability of Inputs
- Time

Elasticity of Demand and Supply Coefficients- Micro Topic 2.4 and 2.5

IV. Notebook P 482 Table 48.1

V. Classwork

- Page 483 1-3 show work and 1-5 Q&A