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1. If the price of apples increases by 10% and quantity demanded falls by 20%, then the price elasticity of demand for apples is 0.5. True or False?
2. The short run price elasticity of demand for gasoline is 0.5, and the long run price elasticity of demand for gasoline is 1.1. Demand for gasoline is ________ in the short run and ________ in the long run. a. elastic; unitarily elasticb. inelastic; unitarily inelasticc. elastic; inelasticd. inelastic; elastic
3. A telephone company wants to increase the consumption of telephone by 12%. The price elasticity of demand for telephone is 0.6. The telephone company should:
a. raise the price of telephone by 0.4%.
b. lower the price of telephone by 2.0%.
c. lower the price of telephone by 20.0%.
d. lower the price of telephone by 25.0%.
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