(10 points)Spring AssignmentSuppose the price of gasoline rises from $1.89 to 2.17per gallon, and in response the quantity demandeddecreases from 20,000 to 18,000 gallons.a) What is the price elasticity of demand?b) What is the change in total revenue? Does this makesense?(Submit on time for bonus marks)

elasticity of demand refers the change in demand due to change in price , and total revenue is the…

Answered: (10 points) Spring Assignment Suppose…

(10 points) Spring Assignment Suppose the price of gasoline rises from $1.89 to 2.17 per gallon, and in response the quantity demanded decreases from 20,000 to 18,000 gallons.

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter5: Elasticity Of Demand And Supply

Section: Chapter Questions

Problem 2.4P

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Question

(10 points)
Spring Assignment
Suppose the price of gasoline rises from $1.89 to 2.17
per gallon, and in response the quantity demanded
decreases from 20,000 to 18,000 gallons.
a) What is the price elasticity of demand?
b) What is the change in total revenue? Does this make
sense?
(Submit on time for bonus marks)

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