Chapter 2, Problem 9P

Suppose the demand function for jelly beans in Cincinnati is linear. Two years ago, the price of jelly beans was $1 per pound, and consumers purchased 100,000 pounds of jelly beans. Last year the price was $2, and consumers purchased 50,000 pounds of jelly beans. No other factors that might affect the demand for jelly beans changed. What was the elasticity of demand at last year’s price of $2? At what price would the total expenditure on jelly beans have been largest?