1) If the quantity of a good that's demanded increases by 1% whenever consumer income increases by 1.5%, then what can we say about this good?
2) Suppose the quantity of good X that's demanded at any point in time will increase by 2% whenever the price of good Y increases by 1.2% or whenever the price of good X decreases by 3%. Explain how we know whether good X has an elastic or inelastic demand.
3) If the demand for good W is highly inelastic (i.e. very close to 0), then how would you expect a relatively small price increase to affect the sales revenue earned from selling this good? (hint: remember that price increases lead to fewer units being sold, sales revenue is the price of something times the quantity sold, and how quantity changes for an inelastic good whenever its price increases).