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Question 1

Suppose that a store reduces the price of peanut butter from $4.3 to$3.9. As a result, quantity demanded increases from 200 to 240.

Using the point elasticity approach, calculate percentage change in price.

Hint

Question 2

Suppose that a store decreases the price of peanut butter from $4.3 to$3.4. As a result, quantity demanded increases from 200 to 270.

Using the point elasticity approach, calculate price elasticity of demand.