Suppose the price elasticity of demand for heating oil is 0.2 in the short run and 0.7 in the long run.
c. If the price of heating oil rises from $1.80 to $2.20 per gallon, what happens to the quantity of heating oil demanded in the short run? In the long run? (Use the midpoint methodin your calculations.)
Suppose the price elasticity of demand for heating oil is 0.2 in the short run and 0.7 in the long run.
c. If the price of heating oil rises from $1.80 to $2.20 per gallon, what happens to the quantity of heating oil demanded in the short run? In the long run? (Use the midpoint methodin your calculations.)
dekeoteted dhtekt hio3qtk3
Quantity demanded will increase by 0.4
2we2
Suppose the price of elasticity of demand for heating oil is 0.2 in the short run and 0.7 in the long
To determine the change in quantity demanded in response to a change in price, we can use the midpoint method. The midpoint method calculates the percentage change in quantity demanded by taking the average of the initial and final quantities, and then dividing that by the initial quantity.
Let's calculate the changes in quantity demanded in the short run and the long run using the given price elasticities and the midpoint method.
a. Short run:
1. Calculate the percentage change in price:
Initial price = $1.80
Final price = $2.20
Percentage change in price = ((2.20 - 1.80) / ((2.20 + 1.80) / 2)) * 100
2. Calculate the change in quantity demanded using price elasticity:
Price elasticity of demand = 0.2
Change in quantity demanded = Price elasticity of demand * Percentage change in price
b. Long run:
1. Calculate the percentage change in price:
Initial price = $1.80
Final price = $2.20
Percentage change in price = ((2.20 - 1.80) / ((2.20 + 1.80) / 2)) * 100
2. Calculate the change in quantity demanded using price elasticity:
Price elasticity of demand = 0.7
Change in quantity demanded = Price elasticity of demand * Percentage change in price
By following these steps, we can calculate the change in quantity demanded in the short run and the long run.