Suppose 50 bottles of beer are demanded at a price of $1 per bottle. Reducing the price at happy hour to $0.20 per bottle increases the quantity demanded to 70 bottles.

1. What is the price elasticity of demand (using the mid-point formula discussed in class)?

2. Is the demand elastic, inelastic, or unit elastic?

3. What happens to the total revenue of the firm if they lower their price from $1 to $0.20?