1. in 2020 due to state regulationsridesharing company X had to raise its price which led to lower quantity demanded of their rides (a movement along the demand curve). The accompanying table describes what happened to prices and the quantity demanded of their service. Using the midpoint method, calculate the price elasticity of demand for the rides.(4 points)

	2019	2020
Quantity demanded (rides)	150 million	83 million
Average price (per ride)	$25	$38

2. What can you conclude about the price elasticity of demand in each of the following statements? (3 points each)

a. "The pizza delivery business in this town is very competitive. I'd lose half my customers if I raised the price by as little as 10%."

b. "My economics professor has chosen to use the Krugman/Wells textbook for this class. I have no choice but to buy this book."

c. "I always spend a total of exactly $10 per week on coffee."

3. Use an elasticity concept to explain each of the following observations.(3 points each)

a. Some goods that were once considered luxuries, like a telephone, are now considered virtual necessities. As a result, the demand curve for telephone services has become steeper over time.

b. Cement is the primary building material in Mexico. After new technology makes cement cheaper to produce, the supply curve for the Mexican cement industry becomes relatively flatter.

c. A recent government legislation brought price of lifesaving drug X down by more than 300%, yet there was no change in quantity demanded of the said drug.

4. Mark and Jeff operate a small company that produces souvenir footballs. Their fixed cost is $2,000 per month. They can hire workers for $1,000 per worker per month. Their monthly production function for footballs is as given in the accompanying table.(18 points)

\fQuantity Quantity of labor of AVC of AFC of ATC of TC of MC of (workers) footballs football football football football football O 0 N/A N/A N/A N/A 300 2 800 3 1,200 4 1,400 5 1,500