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Economics:

10th Edition
BOYES + 1 other
Publisher: Cengage Learning
ISBN: 9781285859460

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BuyFindarrow_forward

Economics:

10th Edition
BOYES + 1 other
Publisher: Cengage Learning
ISBN: 9781285859460
Chapter 20, Problem 11E
Textbook Problem
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The price elasticity of the demand for gasoline is -0.02. The price elasticity of demand for gasoline at Joe’s 66 station is -1.2. Explain what might account for the different elasticities.

To determine

Reason for different elasticity's are to be determined.

Explanation of Solution

When price elasticity is -0.02, it implies change in quantity demanded is indifferent to change in price. This means price elasticity is perfectly inelastic. There will not be significant change in quantity demanded due to change in price.

But in the case of Joe's 66 station, price elasticity of demand is -1.2. This means elasticity is highly elastic...

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