Larissa is a famous attorney with a great reputation in court. She charges her clients 300 for each hour she spends working on their cases. If she earned 450,000 in hourly wages last year, and by raising her rates to 350 per hour her income increased to 490,000 what can we say about the elasticity of demand for Larissa's legal services?
a. It is approximately equal to 2.3.
b. It is approximately equal to 1.6.
c. It is approximately equal to 1.0.
d. It is approximately equal to 0.45.
e. It is approximately equal to 0.1.
Question 2
Which of the following statements is true?
a. b and d.
b. Total revenue is maximized when elasticity is one.
c. Goods are said to be price inelastic when the elasticity is greater than two.
d. Demand for milk is more elastic than demand for football tickets.
e. Demand for 5-cent candy is more elastic than demand for sweaters.
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