Chap004.8 - Demand for gasoline is more inelastic Gasoline...

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8 Chapter 4: Elasticity Slide 43 Quantity of lemonade (cups/day) Price (cents/cup) 0 14 S If MC is constant, then the price elasticity of supply at every point along a horizontal supply curve is infinite A Perfectly Elastic Supply Curve Chapter 4: Elasticity Slide 44 ± Determinants of Supply Elasticity z Flexibility of inputs z Mobility of inputs z Ability to produce substitute inputs z Time The Price Elasticity of Supply Chapter 4: Elasticity Slide 45 ± Economic Naturalist z Why are gasoline prices so much more volatile than car prices? ²
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Unformatted text preview: Demand for gasoline is more inelastic Gasoline market has larger and more frequent supply shifts The Price Elasticity of Supply Chapter 4: Elasticity Slide 46 Greater Volatility in Gasoline Prices than in Car Prices Quantity (millions of gallons/day) Price ($/gallon) 6 1.69 S D 1.02 7.2 S Gasoline Chapter 4: Elasticity Slide 47 Greater Volatility in Gasoline Prices than in Car Prices Price ($1,000s/car) D 17 S 11 Quantity (1,000s of cars/day) Cars 16.4 12 S Cars...
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This note was uploaded on 02/20/2012 for the course ECON 202 taught by Professor Brightwell during the Spring '08 term at Texas A&M.

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