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Supply and Demand

I only need 1 sentence for each question.

1. Are CD depositors moving their money between banks based on very low CD interest rate differentials? Would a 0.1% higher rate attract a great deal of deposits in CDs?

(Note going from 1.3% to 1.4% is a 7.7% change in the interest rate in percentage terms (the percentage change in a percentage rate, even though the rate has gone up by 0.1%--that is by a tenth of a percent in absolute terms.)

2.If price elasticity of demand is 0.3, what is the effect on lowering prices by 10%?

3. If price elasticity of demand is 1.5, what is the effect on lowering prices by 10%?

Solution Preview

1. A .1% increase in CD rates would not induce people to change banks. The hassle of ...

Solution Summary

The solution provides a clear and concise one line answer to the supply and demand questions below. More detailed explanation can be obtained by contacting the OTA. The solution provides clear explanation for the questions. Overall, an excellent response.