1. Assume that demand for a product is linear with the equation Q = 260x(1-P/13), where Q denotes quantity and P denotes price in dollars. What is the elasticity when the price is $8? Select one:

a.-1.6

b.None of the above

c.-0.7

d.-1.5

2. A product has a variable cost of $20 per unit, and demand is known to be linear. If the product is priced at $30 it is expected that none will be sold. For every dollar decrease in price, the demand is expected to increase by three additional units. What is the expected quantity sold at the optimal price? Select one:

a.None of the above

b.15

c.25

d.20

3. George regularly sells home made lunch boxes for a price of $20 to 100 customers. He knows that if he increased his price by even a dollar, he will loose all his customers. He has now reduced the price to $19 and has gained 10 additional customers. What is the total surplus that has his existing customers have gained? Select one:

a.$110

b.$100

c.$20

d.$10

4. George buys a kilo of bananas regularly every week. He continued to buy a kilo of bananas regularly even when the price of bananas were $9 per kilo, but stopped buying when the price increased more than $9 per kilo.Currently he is paying $1.50 for a kilo of bananas. Calculate the surplus that George has. Select one:

a.None of the above

b.-$1.5

c.$7.50

d.$0

5. Coles sells 10,000 kilos of bananas at a regular price of $2. Its elasticity at its regular price is -0.2. Cole's main competitor Woolworths (WOW) also sells bananas at $2. If the price of bananas at WOW increased to $4 and Coles doesn't change the price, then the quantity sold at Coles will increase to 11,000 kilos. WOW's reaction elasticity is 0.9. Calculate the cross elasticity of WOW's price on Cole's sales. Select one:

a.None of the above

b.0.2

c.0.1

d.0.9

6. Lena sells hand-crafted boomerangs at Victoria Market. From her past experience, she knows that there are about 20 customers with a reservation price of $10, 10 customers with a reservation price of $20 and 5 customers with a reservation price of $30, in a day. How many pieces can she expect to sell if she charges a price of $15? Select one:

a.10

b.15

c.20

d.35