1. You own a small store. Your cashier thinks you should raise prices to increase your total revenue and your customer thinks you should lower prices to increase your total revenue. The cashier thinks the price elasticity of demand is ________ and the customer believes the price elasticity of demand is ________.

A.

elastic; elastic

B.

elastic; inelastic

C.

inelastic; elastic

D.

unit elastic; elastic

E.

inelastic; inelastic

2. Suppose a local photographer increases his prices by 8 percent and quantity demanded decreases by the same percentage. This set of facts indicates that the demand for his services is

A.

perfectly inelastic.

B.

perfectly elastic.

C.

unit elastic.

D.

inelastic.

E.

elastic.

3.