a. If the price of a good increases by 8% and the quantity demanded decreases by 12%, what is the price elasticity of demand? Is it elastic, inelastic or unit elastic?

b. Anna owns a candy store. She charges $10 per pound for her handmade chocolate. You, the economist, have calculated the price elasticity of demand for chocolate in her town to be -2.5. If she wants to increase her total revenue, what advice will you give her and why?

c. Suppose you know that the price elasticity of demand for good X is -2. Suppose that the price in the market is initially $10 and the quantity demanded is 100 units. Then price decreased by 10%. What will be the quantity demanded at the new price?

d. Suppose that Amy's income elasticity of demand for designer purses is 1.2. If Amy's income rises by 5%, by how much would we expect her purchases of designer purses to change as a result?