When the prices of compact discs (you remember those, right?) increased from $10 to $11, the quantity of CDs demanded decreased from 100 to 87. Using the Mid-Point Method (page 99), what is the price elasticity of demand for CDs? Explain why the demand is elastic or inelastic (not just that it is greater or less than one, but what makes it elastic or inelastic)?

If you are unsure about how to determine percentages, review the appendix to Chapter One. Name a product you regularly purchase for which you have an inelastic demand and one for which you have an elastic demand. What determines whether your demand is elastic or inelastic for these products?