1.You have just been hired as a business consultant to determine what pricing policy would be appropriate in order to increase the total revenue of a major shoe store. What is the first step you would take?

Determine the price elasticity of demand for the shoes

2.Your younger sister needs $50 to buy a new bike. She has opened a lemonade stand to make the money she needs. She currently is charging 25 cents per cup, but wants to adjust her price to earn the money faster. If you know that the demand for lemonade is elastic. What is your advice to her?

3.Last year, Sheila bought 6 pairs of shoes when her income was $40,000. This year, her income is $50,000 and she purchased 10 pairs of shoes. Is shoes normal or inferior to Sheila? Why?

4.Last month, sellers of Good Y took in $100 and sold 50 units of Good Y. This month sellers of Good Y raised their price, took in $120 and sold 40 units of Good Y. At the same time, the price of Good X stayed the same, but sales of Good X increased from 20 units to 40 units. What can we conclude about Goods X and Y?