1. Are the following statements true or false? Explain your answers.
a. A 10 percent reduction in price that leads to a 5 percent increase in the amount purchased indicates a price elasticity of more than 1.
b. 10 percent reduction in price that leads to a 2 percent increase in total expenditures (or total revenue) indicates a price elasticity of more than 1.
c. If the percentage change in price is less than the resultant percentage change in quantity demanded, demand is inelastic.
2. Respond to the following questions: If you really like pizza, should you try to consume as much pizza as possible? If you want to succeed, should you try to make the highest possible grade in your economics class?