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Unformatted text preview: might be prevented from charging this price if they are heavily competed or video retail prices lower. e) ((220-180)/200) / ((7-6)/6.5) = 1.3 The elasticity is the same as before. This is because the price change remains the same and the change in quantity is of same proportion. Therefore, the proportion of change in quantity demanded to change in price remains the same. f) ((210-190)/200) / ((7-6)/6.5) = 0.65 The elasticity of demand for the price change of $7 to $6 is now less than before. This is due to the fact that the quantity demanded has increase as before, but in a significantly smaller interval. Price Quantity Total Expenditure $7 90 $630 $6 110 $660 $5 130 $650 $4 150 $600 $3 170 $510...
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This note was uploaded on 04/13/2008 for the course ECON 132 taught by Professor Rado during the Spring '08 term at BC.
- Spring '08