1.Suppose you learn that the demand elasticity for your firm's good is -5. How can you increase total revenue?

You can increase total revenue by raising price.

You are already charging a price that maximizes total revenue.

You can increase total revenue by lowering price.

Not enough information to determine.

2.Given the following two points on a demand curve, calculate demand elasticity using the midpoint rule:

P1 = 200, Q1 = 400

P2 = 150, Q2 = 500

-0.5

-1.29

-0.78

-3.33

3.Which of the following goods should we expect to be most inelastic?

A good with some substitutes that most people consider to be a luxury.

A good with no substitutes that most people consider to be a luxury.

A good with some substitutes that most people consider to be a necessity.

A good with no substitutes that most people consider to be a necessity.

4.Consider the following graph of a linear demand curve.