Asked by Kelis
Consider the market for taxi rides in a particular metropolitan area.
a) Suppose that, when the price per mile increases by 40%, total miles demanded falls by 30%. Solve for the price elasticity of demand.
b) Is the demand for taxi rides elastic or inelastic (in this example)? Explain how you answer in part a) is relevant.
a) Suppose that, when the price per mile increases by 40%, total miles demanded falls by 30%. Solve for the price elasticity of demand.
b) Is the demand for taxi rides elastic or inelastic (in this example)? Explain how you answer in part a) is relevant.
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