A price floor on a pair of designer sunglasses, however, would be ineffective as a pair of designer sunglasses is a luxury and it is an elastic demand. There are many substitutes for sunglasses. Since Demand for sunglasses is inelastic, the price floor will cause the total revenue to decrease and thus, it is not effective. 

The price elasticity of demand for good A is always negative due to the inverse relationship between price and quantity demanded of a good, ceteris paribus.

 

The demand will be price elastic as the absolute value of |Ed| will become more than 1 as the percentage change in quantity demanded is more than percentage in price. It means that consumers are very responsive to the price change.  

 

The total revenue earned by the film selling good A were increase. When the demand is inelastic, the percentage increase in price is more than the percentage decrease in quantity. There is more gain than loss, thus, increase in price will increase total revenue.

   

A price floor on milk will be effective. As milk is an inelastic demand, it is a necessity, consumers will still purchase them regardless of their price change. Thus, this means that producers’ total revenue will increase due to high price and quantity demanded staying relatively constant.

Price floor is the minimum legal price below which a particular good or service cannot be sold. Price floor is to ensure producers a higher and more stable income, which was succeeded.

Therefore, it is effective.

Price floor is to ensure producers a higher and more stable income but it will not succeed as it will only cause consumer to stay away from the product leading to fall in revenue. And it will in turn cause surplus which means government intervention is needed to prevent downward pressure on price and they often steps in to buy up surplus as part of its support program towards producers.

Therefore, it is not effective

Nature of fancy restaurants is normal goods  as the income elasticity of demand is more than zero/is positive and the demand for it increase when income increase. 

The nature of bus ride is inferior good.  This is because the income elasticity of demand is less than zero and when income increase, demand decreases. 

  

                        

a.     Cigarettes

The demand for the following products is price elastic. This is because many people are addicted to cigarettes and it becomes a habit such that they will need it no matter what, hence even if price increases, they will still need to buy thus the demand for the product is price elastic. 

b.     A particular brand of cigarettes

The demand for that particular brand of cigarettes is price inelastic. This is because there are plenty of brands of cigarettes, if one particular brand increases, people will just move to other brands of cigarettes to buy instead of the one which increase. In this manner, the profit will drop making the price inelastic.

c.     Butter

The demand for the product is price elastic. This is because, butter sometimes it is a necessity, hence even if price increases, people will still need to buy it. 

d.     Salt

The demand for the product is price elastic. This is because, there are no close substitute for salt. There are soy sauce or other sauces that can replace it, however salt is in a solid form whereas its substitute is a liquid form hence people might still want to stick with salt as it will not cause a color change hence the price for salt is price elastic.

e.     A two-week trip to Switzerland

The demand for a two-week trip to Switzerland is price inelastic. This is because, there are plenty of other countries that people can travel to, hence if the trip is Switzerland, there will most likely choose another location hence the price for a two-week trip to Switzerland is price inelastic.