1. Fill in the blanks most appropriately: In class we discussed the claim by Amazon that demand in the ebook market is elastic for a price decrease from $14.99 to? $9.99 per ebook. If this is true, RAISING ebook prices will _____________ ebook revenue for authors. Compared to the elasticity of demand for ebooks, demand for all formats of a specific book will likely be ________ elastic.
A. decrease ; more
B. not change ; more
C. decrease ; less
D. increase ; less
E. increase ; more
F. not change ; less
2. Jim and Ed both raise cattle. The property line separating their adjacent farms runs through a long narrow meadow. Its exact location is unknown and can't be determined. Each farmer must choose independently how many cattle to graze in the meadow. Each has only two? choices, "a lot", or "few". If both graze a lot of cattle, each earns $4,000. If one grazes a lot of cattle, and the other grazes only a few, the one who grazes a lot earns $10,000 and the one who grazes a few earns $1,000. If both farmers graze a few cattle, each earns $6,000. In equilibrium, the total combined profits to Jim and Ed are:
A. $6,000
B. $8,000
C. $11,000
D. $12,000
E. $20,000