Problem 1.

The table shows the demand for DVD movie rentals

a. Find the price elasticity of demand when the rental price increases from $3 to $5 per DVD.

b. Find the price elasticity of demand when the rental price increases from $2 to $4 per DVD.

Price	Amount
0	150
1	125
2	100
3	75
4	50
5	25
6	0

Problem 2.

The demand schedule for computer chips is

Price	Amount	EP	Total Revenue
200	50
250	45
300	40
350	35
400	30

a. What happens to total revenue when the price of a chip rises from 350 to 400? Calculate the price elasticity in that segment?

b. What happens to total revenue when the price of a chip rises from 200 to 250? Calculate the price elasticity in that segment?

c. At what price is total revenue at its maximum?

d. What happens to total revenue when the price of a chip rises from 300 to 400?Calculate the price elasticity in that segment?