QUESTION 4: (Show all underlying work, otherwise I will take points off.) (12 points) A company faces D1 curve for its product. Price on D1 curve decreases from $4 to $3, quantity demanded increases from 6 to 7 units. A) Calculate the price elasticity of demand on D1. Show your work and choose the answer form below. a)-1.8 b).-0.28 c)-0.5 d)-2.8 B) Refer to your answer above. The demand on Diis: a) Perfectly inelastic b) Inelastic c) Perfectly elastic d) Elastic C) Refer to your answer to the question above. If the price on D1 decreases by 10 percent, the quantity demanded by percent, company total revenue a) decreases; 10%, remains the same c) falls: 18%, increases b) increases: 5%, falls d) increases 2.8%; falls D) Refer to your answer in part b. If the company from above desires to increase the quantity sold in the market and total revenue by 20 percent, how it should adjust its price? a) decrease price by 20% b) increase price by 20% c) increase price by 40% d) decrease price by 5% E) If the income elasticity of demand for a product is 0.70 a You can conclude that the product is: Inferior good, income inelastic Normal, necessity good, income inelastic Normal luxury good, income elastic Inferior good, income elastic b. If consumers income falls by 10%, market demand for this product and quantity demanded by percent