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Unformatted text preview: milk, the demand relationships are: Dollar U.S America D, P 10 Q Pound British Britain D, 2P 10 Q x therefore: 1 P Q Dollar U.S. America D, 2 P Q Pound British Britain D, x If 6 Q Q Britain D, America D, , then: 4 P Dollar U.S and 2 P Pound British x So the own-price elasticities of demand in each country must be: 3 2 Q P P Q U.S. America D, Dollar U.S. Dollar U.S. America D, U.S. 2/3 Q P P Q Britain Britain D, Pound British Pound British Britain D, Britain x How much less milk would be demanded in each country if the price rose 1% in each country? 0.67% less Page 47...
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This note was uploaded on 12/29/2011 for the course ECO 311 taught by Professor Willis during the Fall '10 term at SUNY Stony Brook.
- Fall '10
- Price Elasticity