1.When Columbia's bus fares increased from $.80 to $1.00, the number of riders increased from 1000 per week to 600 per week. Find price elasticity of demand. Is demand elastic or inelastic?

2.Big O Tires reduced the price of its tires from $80 per tire to $70 per tire. The following month, sales of the tire increased from 400 units to 600 units. What is the price elasticity of demand for the tire?

3.A 20% increase in Abby's income resulted in an increase of 10lbs in her annual consumption of 40lbs of steak. Find the income elasticity of demand for steak

4.The Kirksville T-shirt Company recently raised the price of its shirts from $2.50 to $3.00. At the old price, 70,000 shirts were sold on an average week.

a.How many shirts have to sell at the new price to keep its total revenue unchanged?

b.If the company finds that in fact its revenues fall after the price hike, what does this mean about the elasticity of demand for shirts?

5.Suppose Pizza Hut sells 5000 pizzas a day at $4.75 per pizza. Domino's sells 6500 pizzas a day at $4.50 per pizza. The manager of Pizza Hut decided to lower the price by $0.75 to increase sales. As a result of this change, Pizza Hut sales increased to 6000 and Domino's sales dropped by 1500 pizzas.

a.Determine the elasticity of demand for Pizza Hut. What is the effect of this price change on total revenue for Pizza Hut?

b.What is the cross-price elasticity of demand for Pizza Hut? What does it mean?