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Question 1

Suppose that a store reduces the price of cereal from $4.2 to $3.6. As a result, quantity demanded increases from 210 to 260.

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

Your answer should be expressed in absolute value terms.

 

Hint




Question 2

Suppose that a store decreases the price of peanut butter from $4.1 to $3.6. As a result, quantity demanded increases from 180 to 250.

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

Your answer should be expressed in absolute value terms.

 

Hint