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Question 1
When the local grocery store puts cereal on sale, reducing its price from $4.00 per item to$3.70 per item, the quantity sold increases from 210 per week to 240 per week. This response illustrates which of the following concepts?

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Question 2
What does this concept represent?

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Question 3
Let's look at the first part of the formula. How do we find the percentage change in quantity using the midpoint formula?

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Question 4
How do we express the percentage change in quantity using the variables Q1 (original quantity) and Q2 (new quantity)?

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Question 5
Now calculate the percentage change in quantity demanded by plugging in the numbers for Q1 and Q2.

percentage change in quantity demanded =
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Question 6
Now let's look at the second part of the formula. How do we find the percentage change in price using the midpoint formula?

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Question 7
How do we express this using the variables P1 (original price) and P2 (new price)?

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Question 8
Now plug in the numbers for P1 and P2 to calculate the percentage change in price.

Question 9
Finally, using the whole formula, calculate the value of the price elasticity of demand for cereal.

price elasticity of demand =
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Question 10
Explain what this result means in words. Then click 'Submit' to compare your answer to ours.

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