PS3_1 - Rice University ECON 211 Fall 2009 Problem Set...

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Rice University ECON 211, Fall 2009 Problem Set 3 (100 points) Due on Friday, Sept. 18 Note that there are two parts to this assignment. You must hand in answers to questions in Part I. They will be graded. Questions in Part II will be discussed in the Tutorial sessions. You should not hand in answers for them. They will not be graded. Answers to all questions – in both Parts – will be posted on OwlSpace. Please keep your work neat: type your answers whenever possible. Thanks. Part I: Graded 1. (30 points) The accompanying table shows the hypothetical price and weekly quantity demanded of milk in the state of Texas. Price of milk ($ per gallon) Quantity of Milk demanded (gallons) 1 90,000 2 60,000 3 40,000 4 30,000 A. Calculate the price elasticity of demand when the price of a gallon of milk rises from $1 to $2. (Use the midpoint method) B. Calculate the price elasticity of demand when the price of a gallon of milk rises from $2 to $3. (Use the midpoint method) C. Calculate the price elasticity of demand when the price of a gallon of milk rises from $3 to $4. (Use the midpoint method)
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2. (30 points) (Similar to Krugman Chapter 5, Problem 2) In order to ingratiate himself
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This note was uploaded on 12/07/2009 for the course ECON 211 taught by Professor Na during the Fall '08 term at Rice.

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PS3_1 - Rice University ECON 211 Fall 2009 Problem Set...

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