1. ANS:
a.
b.
c.
d.
e.
f.
Total revenue from children's tickets is $100 and from adult tickets is $250. Total revenue from all
sales would be $350.
The demand for children's tickets is more elastic.
The adult ticket market has the more inelastic demand.
The elasticity of demand between $5 and $2 is 0.26, which is inelastic.
The elasticity of demand between $5 and $2 is 1.0, which is unit elastic.
Total revenue in the adult market would be $320. Total revenue in the children’s market would be
$120, so total revenue for both groups would be $440. $440 - $350 is an increase in total revenue
of $90.
2. ANS:
a.
b.
c.
d.
e.
f.
g.
h.
i.
j.
A to B
B to C
B
B to C
A to B
B
B
A to B
B
B to C
3. ANS:
The appropriate elasticity to compute would be cross-price elasticity. The cross-price elasticity for this example
would be 1.36. The two goods are substitutes because the cross-price elasticity is positive.
4. ANS:A 5. ANS:B
6. ANS: C
7. ANS: A
8. ANS:A
9. ANS:C
10. ANS:B
11. ANS:C
12. ANS:A
13. ANS:D
14. ANS:C
15. ANS:B
16. ANS:C
17. ANS:C
18. ANS:D
19. ANS:C
20. ANS:C
21. ANS:A
22. ANS:B
23. ANS:D
24. ANS:A
25. ANS:C
26. ANS:B
27. ANS:D
28. ANS:C
29 ANS:C
30. ANS:A
31. ANS:A
32. ANS:A
33. ANS:B
34.ANS:C
35. ANS:A
36. ANS:C
37. ANS:B