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Fill in the blanks and please show how you arrived at numerical answers .    The...

Fill in the blanks and please show how you arrived at numerical answers

  1. .    The price elasticity of demand for a firm’s product is equal to –2.25 over the range of prices being considered by the firm’s manager. If the manager increases the price of the product by 9 percent, the manager predicts the quantity demanded will ________ (increase, decrease) by ________ percent.
  2. The price elasticity of demand for an industry’s demand curve is equal to –2.25 for the range of prices over which supply decreases. If total industry output is expected to decrease by 14 percent as a result of the supply decrease, managers in this in­dustry should expect the market price of the good to ________ (increase, decrease) by ________percent.
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Answer #1

Price elasticity of demand measures how responsive quantity demanded is to price changes. The formula for it is given by:

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