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Individual Project 2

# Individual Project 2 - Q2 Q1 Q1 Q2 2-P2 P1 P1 P2 2 20 gal...

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Microeconomics and Market Systems 1 Microeconomics and Market Systems Marquetta Nixon Microeconomic Professor Grace O. Onodipe Date: Sept. 5, 2011 Due Date: Sept. 4, 2011

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Microeconomics and Market Systems 2 At \$3 per gallon, you consumption is 35 gallons for expenditure of \$105 per month. At \$3.50 per gallon, your consumption drops to 20 gallons for expenditure of \$75 per month. In that price range, the demand is relatively elastic. Calculation of Price Elasticity of Demand:
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Unformatted text preview: Q2 - Q1-----------------------( Q1 + Q2 ) / 2-------------------------------P2 - P1-----------------------( P1 + P2 ) / 2 20 gal - 35 gal / (35 + 20)/2 = -15 / 27.5 = -.5455 \$3.50 - \$3 / (\$3 + \$3.50)/2 = \$.50 / \$3.25 = .1538-.5455 / .1538 = 3.5468 = 3.55 The demand is elastic because 3.55 >1. Microeconomics and Market Systems 3 Reference Page www.google.com...
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Individual Project 2 - Q2 Q1 Q1 Q2 2-P2 P1 P1 P2 2 20 gal...

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