The makers of academic books find that when they raise the price of the average book from $50 to $75, quantity demanded among students drops from 100 to 90. Among casual readers, quantity demanded drops from 80 to 40.

a. Using the mid-point formula for elasticities, calculate the price elasticity of demand for each group. You must write out every step to show how you arrive at your answer.

b. Is the demand price-elastic or price-inelastic for each group?

c. Using the determinants of elasticity of demand, explain why there is a difference in elasticity for each group.

d. Using the total revenue test, demonstrate what happens to total revenue when the price of books increases for the two different groups.