Individual Project 2 - Q2 - Q1-----------------------( Q1 +...

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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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This note was uploaded on 09/24/2011 for the course BUSN 105 taught by Professor Markw.preising during the Spring '10 term at American InterContinental University.

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Individual Project 2 - Q2 - Q1-----------------------( Q1 +...

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