Assume that the demand curve is a straight line. If the price per unit of a good rises from $4.50 to X1, it is expected that monthly demand will fall from X2 units to 250,000 units. Give your own appropriate X1 and X2. What is the point price elasticity of demand when the price is $4.50? What is the arc price elasticity of demand over these ranges of price and output? Is the demand for this good price sensitive?

Assume that the demand curve is a straight line. If the price per unit of a good rises from $4.50 to X1, it is expected that monthly demand will fall from X2 units to 250,000 units. Give your own appropriate X1 and X2. What is the point price elasticity of demand when the price is $4.50? What is the arc price elasticity of demand over these ranges of price and output? Is the demand for this good price sensitive?

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter5: Elasticity Of Demand And Supply

Section: Chapter Questions

Problem 1.1P: (Calculating Price Elasticity of Demand) Suppose that 50 units of a good are demanded at a price of...

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