Question 1:

If unit elasticity ( = 1) occurs with a linear and downward sloping demand curve at price p = $50, then which of the following statements would be true?

(a)With p > 50, 1< < 0 so demand is elastic.

(b)With p < 50, ||>1 sodemandisinelastic.

(c)With p > 50, < 1 so demand is elastic.

(d)With p < 50, 1< < 0 so demand is inelastic.

(e)Both (c) and (d) are true.

Question 2:

If point elasticity ||= 3.0 when price p = $45, what is the marginal revenue at that price?

(a)$90 per unit

(b)$30 per unit

(c)$45 per unit

(d)$60 per unit

(e)$15 per unit

Question 3:

If the demand for a product is given by the function

q = ( p 50)^2/ 2

where p is the price and q the quantity demanded, what would be the nature of the point elasticity of demand when p = $10 per unit.

(a) = 1/4 so demand is inelastic.

(b) = 1/2 so demand is elastic.

(c) = 1/2 so demand is inelastic.

(d) = 2 so demand is elastic.

(e) = 2 so demand is inelastic.