Problems in Elasticity

Fruit Elasticity of Demand

Apples 0.16

Bananas 0.42

Grapefruit 1.60

Grapes 0.95

Oranges 1.24

1) Based on these demand elasticity estimates, which fruit is most inelastic? Which is

most elastic?

2) For which of these fruits would a 10% drop in price cause a decrease in total revenue

from the sale of that fruit?

3) If the government could offer "10% off" coupons for only three of these fruits, and it

wanted to have the biggest possible effect on quantity demanded, which three fruits

should get the coupons?

4) Using the elasticity information above, draw two graphs below. One to represent the demand for apples and one for the demand for oranges.