Microeconomics

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4a. In the market for hand-made guitars, when the price of guitars is $800, annual revenues are $640,000. When the price falls to $700, annual revenues decline to $630,000. Over this range of guitar prices, is the demand for hand-made guitars elastic, unit-elastic, or inelastic? Why? Explain.

4b. Why is the demand for gasoline relatively inelastic, while the demand for Exxon’s gasoline relatively elastic?

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