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The owner of a small chain of gasoline stations in a large Midwestern town read an article in a trade publication statin that the own-price elasticity of demand for gasoline in the United States is -0.2. Because of this highly inelastic dema in the United States, he is thinking about raising prices to increase revenues and profits. Do vou recommend this strategy based on the information he has obtained? Explain.

The owner of a small chain of gasoline stations in a large Midwestern town read an article in a trade publication statin that the own-price elasticity of demand for gasoline in the United States is -0.2. Because of this highly inelastic dema in the United States, he is thinking about raising prices to increase revenues and profits. Do vou recommend this strategy based on the information he has obtained? Explain.

Microeconomics: Private and Public Choice (MindTap Course List)
Microeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506893
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter7: Consumer Choice And Elasticity
Section: Chapter Questions
Problem 13CQ: Suppose Erin, the owner-manager of a local hotel projects the following demand for her rooms: a....
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The owner of a small chain of gasoline stations in a large Midwestern town read an article in a trade publication stating that the own-price elasticity of demand for gasoline in the United States is -0.2. Because of this highly inelastic demanc in the United States, he is thinking about raising prices to increase revenues and profits. Do you recommend this strategy based on the information he has obtained? Explain.
Transcribed Image Text:The owner of a small chain of gasoline stations in a large Midwestern town read an article in a trade publication stating that the own-price elasticity of demand for gasoline in the United States is -0.2. Because of this highly inelastic demanc in the United States, he is thinking about raising prices to increase revenues and profits. Do you recommend this strategy based on the information he has obtained? Explain.
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