#1. whenever we run water in one room (kitchen) and turn water on in another room (bathroom) water pressure drops dramaticaly. And for example: if you are taking a shower and some one runs hot or cold water anywere else in the house, the person in the shower loses all hot water.

#2. we have a 40gal. Electric water heater, we run out of hot water way to soon for that size of heater, any answers as to why? Example: run out of hot water in shower in 10 minutes easely.

1) This is a volume problem usually caused by older galvanized pipes building up with minerals and choking down on pressure and volume.
2) This usually indicates a faulty bottom element. When you run out of hot water from the upper part of the heater there's no water coming up from the lower section to replace it so you get a short shower. PS. Turning up the temperature won't get you more hot water. It will just make the little you have hotter. Good luck, Tom

You may also want to check your dip tube. If it was not installed by a good plumber it may have fallen off and only taps the top of your tank. Test you elements first, they are more likely the problem.