Hw3 econ - Homework#3 Microeconomics 1. A. Price elasticity...

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Homework#3 Microeconomics 1. A. Price elasticity of demand for Group A=0.59 Price elasticity of demand for Group B=1.19 B. As for group A, the demand for the good is inelastic (price elasticity of demand is less than 1), the discount will lower the total revenue. As for group B, the demand for the good is elastic (price elasticity of demand is more than 1), the discount will increase the total revenue. C. If Nile.com wants to increase its revenue, discounts should be offered to group B. 2. A. The price of elasticity of demand will increase, because SUVs made by other car manufacturers will be regarded by customers as similar and would be willing to consume instead. B . The price elasticity of demand will decrease, because there will be less substitutes if foreign made SUVs are banned from the American Markets. C. The price elasticity of demand will decrease, because Americans believe that SUVs are much safer than other cars, they will think they have to own a SUV as a necessity.
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Hw3 econ - Homework#3 Microeconomics 1. A. Price elasticity...

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