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Calculating Price elasticity of demand and inflation rate

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Consider the following data

Price of Elasticity Data
P Q
37 32
47 22

Inflation Data
Year CPI GDP
2005 100 345
2006 126 349
2007 136 424
2008 146 526

a) Compute the price elasticity of demand
b) Compute the inflation in 2008 relative to the price of 2007.

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Solution Summary

The solution describes the steps for calculating price elasticity of demand and rate of inflation.

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Please refer attached file for complete solution. Formulas typed with the help of equation writer are missing here.

Solution:
Q1=32 Q2=22
P1=37 ...

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Education
  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
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