Microeconomic Analysis practice questions:

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Question 1 (2 points) 04R. An online bookseller wants to increase its total revenue. One strategy the marketing director has proposed is to offer a 10% discount to customers on every book sold online. The online retailer has divided its customer base into two groups according to their likely responses to the discount offer. The table below provides market driven data on the two groups: Group A Group B Sales volume before discount 1.55 1.5 Sales volume after discount 1.65 1.? Note: Sales are in millions per week Assuming the online retailers' data is reflective of their customer base and the retailer knows which group each customer belongs to when they log onto their website and can choose which group to offer the discount too. Should the retailer offer a discount to a group, if so which group and why based on computing the elasticity of demand for both groups? Question 2 (2 points) Q4E1. Using the concept of elasticity, explain why airlines have imposed fees on things such as checked bagsQuestion 3 (2 points) Q4E2. In the United States, 2007 was a bad year for growing wheat. As wheat supply decreased, the price of wheat increased dramatically, leading to a lower quantity demanded. The table below highlights what happened to prices and the quantity of wheat demanded. 2006 2007 Quantity Demanded (bushels) 2.2 billion 2.0 billion Average price per bushel $3.42 $4.26 Given the above data, compute the price elasticity of demand for wheat and using price elasticity of demand explain in which direction you would expect total revenue to change in and why.Question 4 (2 points) Q4E3. Describe the relationship between price elasticity of demand and maximization of total revenue.Question 6 (2 points] Q4E5. You are part of a consulting team hired by a small manufacturing firm that is contemplating changing the pricing structure for several of its products. You are responsible for overseeing the survey design, data collection, data analysis, as well as developing pricing recommendations based on your team's analysis of the pricing data collected for one of their product lines. Using the arc-elastic method of computing the price elasticity of demand for the product you are responsible for, it has been determined that the price elasticity of demand for this product is 1.67. Write a short statement summarizing your pricing recommendation based on analysis of the product's price elasticity of demand