1. Suppose for some firm, 14 units were sold at the initial price of $33 and after the price rose, 10 units were sold at the new price of $39. Compute the price elasticity of demand and interpret the result.

2.Returning to your computation in #1, will revenue have increased or decreased as a result of that price change? On the basis of this information do we know enough to assess whether the price change was a wise decision for the firm? Explain.

3. Ben purchased 12 gallons of gasoline each day. When the price of gasoline was $2.80 per gallon, Ben purchased 12 gallons of gasoline. When the price of gasoline fell to $2.10 per gallon, Ben purchased 12 gallons of gasoline. Use price elasticity of demand to describe Ben's demand for gasoline. What does Ben's demand curve for gasoline look like?

The midpoint formula is: e = (Q2 Q1)/[(Q2 + Q1)/2] (P2 P1)/[(P2 + P1)/2]