USPS and the Price Elasticity of Demand The following table shows the average stamp prices at USPS for 2018 and 2019. It also shows the quantity of mail handled during that time period. 2018 2019 Average Stamp Price 50 cents 55 cents Price or P) Pieces of Mail Handled (in millions) 146,402 142,562 (Quantity or Q) Answer the following questions. Explain your answers, show all your work, and make sure to clearly state any assumptions you make. 1. Without looking at any of the data, do you expect the demand for postage stamps to be elastic, inelastic or unit elastic? Explain why (focus on the main determinants of demand elasticity and not on the data provided). 2. Based on the data shown above, calculate the Price Elasticity of Demand, JE|, for USPS stamps between 2018 and 2019, using the midpoint method (round your answer to 2 decimal places). Show your work. 3. Based on your calculations and answer to question 3, is the demand for stamps elastic, inelastic, or unitary elastic? Explain why. 4. Interpret the meaning of your answers by completing the following sentence: For every 1% increase in the price of stamps, quantity demanded will .... 5. Based on your calculations and answers to questions 2 and 3 above, if USPS were to increase the price of stamps in the future, would you expect the total revenue (Total Revenue = Price x Quantity) from stamps to go up, down, or stay the same? Why? What assumptions, if any, are you making here