1. Using the following table, compute the elasticities of demand and supply, conduct the Total Revenue Test, and indicate for each elasticity coefficient if it is Elastic, Inelastic, or in Unit Elasticity.

Total

Price Quantity Demanded Ed Quantity Supplied Es Rvenue

$5 45 77

4 50 73

3 56 68

2 61 61

1 67 57

2. Answer the questions below on the basis of the following total utility data for products L and M. Assume that the prices of L and M are $3 and $4 respectively and that the consumer's income is $18.

Hint: You base your purchase decision on marginal utility per dollar.

Units of L Total Utility of L Units of M Total Utility of M

1 9 1 16

2 15 2 28

3 18 3 36

4 20 4 40

5 21 5 42

a) How many units of the each of the two products will the consumer purchase?

b) What is the total utility realized from the optimum purchase?

c) If the price of M decreases to $3, would your decision on purchasing change? If so, how?