What can you conclude about the price elasticity of demand in each of the following statements? a. "The pizza delivery business in this town is very competitive. I'd lose half my customers if I raised the price by as little as \(10 \%\)." b. "I owned both of the two Jerry Garcia autographed lithographs in existence. I sold one on eBay for a high price. But when I sold the second one, the price dropped by \(80 \%\)." c. "My economics professor has chosen to use the Krugman/Wells textbook for this class. I have no choice but to buy this book." d. "I always spend a total of exactly \(\$ 10\) per week on coffee."

Based on the statement, if the price of pizza delivery increases by \(10 \%\), the business would lose \(50 \%\) of its customers. Therefore, the PED can be calculated using the formula: PED \(= \frac{-50 \%}{10 \%} = -5\) Since PED \(= -5\), the demand for pizza delivery is highly elastic. An increase in price leads to a significant decrease in the quantity demanded, resulting in a decrease in total revenue.

In this case, selling the second lithograph led to a price drop of \(80 \%\). There's no mention of percentage change in quantity demanded since both lithographs were unique and irreplaceable. It's not possible to calculate the PED directly, but we can make an educated inference. Considering the extreme decrease in price for the second lithograph, the demand for the product appears to be very elastic. Small changes in the supply (one less lithograph) lead to significant changes in price.

In this situation, students have no choice but to buy the Krugman/Wells textbook. This implies that the demand for this textbook is perfectly inelastic because the quantity demanded would remain unchanged regardless of the price. PED \(= 0\) (perfectly inelastic) A change in price for the textbook will not affect the quantity demanded, and if the price increases, the revenue will increase as well.

The given statement implies that the individual spends a fixed amount of money on coffee irrespective of the price of coffee. This implies that as the price of coffee increases, the individual would buy a smaller quantity in order to keep the total spending on coffee at \)10. Therefore, the demand for coffee in this case is unitary elastic because the total revenue remains constant as the price changes. If we let \(P\) represent the current price and \(Q\) represent the current quantity of coffee purchased, then Total revenue \(= PQ = \$10\) If the price changes to \(P(1 + %\Delta P)\), then the quantity demanded will change by a factor of \((1 + %\Delta Q)\), and the new total revenue would be New total revenue = \(P(1 + %\Delta P)Q(1 + %\Delta Q)\) Since the total revenue remains constant, this implies that \(1 + %\Delta Q = \frac{1}{1 + %\Delta P}\) From this equation, it's clear that the percentage change in quantity demanded is directly related to the percentage change in price, and the demand is unitary elastic (PED \(= 1\)).