The price elasticity of demand for a good is -0.50. By how much must the price of the good decrease in order for sales to rise by 12%?
a.
3%.
b.
4.8%.
c.
12.4%.
d.
24%.
Question 24
Suppose Joe purchases 5 six-packs of beer per month when his monthly income is $100. Joe receives a raise at work, giving him an extra $40 per month in take-home pay, and Joe now purchases 7 six-packs of beer per month. What is Joe's income elasticity of demand for beer?
a.
2.
b.
1.
c.
0.3.
d.
0.05.
Question 37
Suppose we observe that the price of gasoline has been rising, even though the quantity of gasoline sold has been falling. We can conclude that
A.) The law of supply does not hold for gasoline
B.) The law of demand does not hold for gasoline
C.) The demand for gasoline must have fallen
D.) The supply of gasoline must have fallen
