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(Solved by Expert Tutors) Thanks for your help with my last assignment.? I appreciated your>


work.? It was very helpful.? I'm wondering if you can help me with another assignment on price elasticity?? Here are the instructions:
Price Elasticity of GasolineIntroduction and AlignmentThe purpose of this assignment is to assess your understanding of elasticity concepts. ?Instead of actually calculating elasticity, you will be asked to explain how you would calculate it and discuss it from the point of view of someone selling gasoline. ?You will have the opportunity to see how the concepts are applied in the real world.
Upon completion of this assignment, you should be able to:

-Explain how to measure the price elasticity of demand and supply, and the cross-elasticity and income elasticity of demand.

Resources
-Textbook: Essential Foundations of Economics, 7/E
-Media: 2.4 Resource: Changes in Supply and Demand
-MyEconLab

Background InformationNone.


Instructions
-Review Chapter 5 in Essential Foundations of Economics and review the media Figure 5.7.
-View the media 2.4 Resource: Changes in Supply and Demand.
-Next, consider the following scenario:
-In June 2008, the U.S. retail gas price jumped from $3 to $4 a gallon.
-This is a 33% increase in price from January 2008.
-During that time, the total quantity of gasoline purchased fell by 3%.
-Supplies of gasoline produced also decreased from 1 million barrels to 800,000 barrels.
-No viable substitute has been created to replace gasoline.
-In a two- to three-page paper (600 words minimum), address the following. Be sure to show all your work.
-Explain how you would calculate the price elasticity of demand for gasoline.
-In general terms, explain how consumer and producer surplus will change as a result of this price increase.
-Because there is no viable substitute for gasoline at this time, what can you say about the price elasticity for gasoline?
-Explain the elasticity of supply for gasoline. (If prices go up, how quickly would the supply of gasoline increase?)
-Is the demand for gasoline elastic, inelastic, perfectly elastic or inelastic, or unit elastic? Why?

 


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