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The price elasticity ( ε ) of demand for Q has been estimated at -0.5. Current consumption Q* is 70 units and market price (P*) is 0.70.
a. Fit a linear demand curve to the observed market data. Illustrate your result using a suitably labelled diagram. Hint: ε - = b(P*/Q*)and the equation for a linear demand function is Q* = a-bP*.
b. Now assume that the price of Q increases to P* = 0.80. Using your estimated demand function, calculate the change in consumer surplus arising from the price increase. Illustrate your result.
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What is the difference between decreasing marginal returns and negative marginal returns?
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Rationale of Group Project Group project allows you to pursue authentic learning with your peers, and to apply theories taught in class and textbooks to real world situations.
please can you explainn what "down 0.1 percentage point on the quarter means"?
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