Homework Help: Microeconomics

Posted by Kelis on Saturday, March 27, 2010 at 10:13pm.

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.

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