Econ 172

HW 2 Due Friday Feb 3

Chapter 3

Questions: 1, 4, 12, 14

Problems: 15, 18

1) Which good would you expect to have a greater price elasticity: a gallon of gasoline sold at a specific gasoline station on Main Street in Phoenix, a gallon of gasoline sold in Phoenix, or a gallon of gasoline sold in Arizona? Why?

2) The price elasticity of demand for gasoline is estimated to be -0.2. Two million gallons are sold daily at a price of $1. Use this information to calculate a demand curve for gasoline assuming it is linear.