Answer the following to determine your knowledge of elasticity: (1) Suppose you are the chief executive officer of a firm, and you have been planning to reduce your prices. Your marketing manager reports that the price elasticity of demand for your product is 0.65. How will this news affect your plans?

If the price elasticity of demand for gasoline equals 0.3, then qn increase in the price of a gallon of gasoline from $3.70 to $3.90  A) decreases total revenue. B) increases total revenue. C) leads to no change in total revenue. D) makes the demand for gasoline elastic. E) Both answers B and D are correct.

Question 18.18.   You are the sales manager for a software company and have been informed that the price elasticity of demand for your most popular software is less than 1.  To increase total revenues, you should:         increase the price of the software.        decrease the price of the software.        hold the price of the software constant.        increase the supply of the software. Question 19.19.   A state government wants to increase the taxes on cigarettes to increase tax revenue.  This tax would only be effective in raising new tax revenues if the price elasticity of demand is  unity.        elastic.        inelastic.        perfectly elastic. Question 20.20.   Movie theaters charge lower prices to see a movie in the afternoon than in the evening because there is an  inelastic supply of movies in the evening.        elastic demand to see movies in the evening.        elastic demand to see movies in the afternoon.        inelastic demand to see movies in the afternoon.

Melanie really enjoys using her old-school charcoal grill to cook steaks, but she has found that due to environmental regulations, charcoal prices have gone up 50%. What is her price elasticity of demand for the rest of this month going to be compared to what it will be in the spring? Please explain why.