7. The world price of good Y is $5.00 each. The pre-trade price of good Y in Taiwan is $2.50 each. With free trade, in the good Y market in Taiwan, consumers (A) and producers will both lose. (B) and producers will both benefit. (C) will lose and producers will benefit. (D) will benefit and producers will lose.

1. When the local used bookstore prices economics books at $20.00 each, they generally sell 70 per month. If they lower the price to $8.00 each, they sell 90. Hence, the elasticity of demand for these economics books is (A) 3.43, so this store should lower price to raise total revenue. (B) 3.43, so this store should raise price to raise total revenue. (C) 0.29, so this store should lower price to raise total revenue. (D) 0.29, so this store should raise price to raise total revenue.

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