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Price Elasticity

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Suppose the own price elasticity of market demand for retail gasoline is -0.9 and Rothschild Index is 0.6 and a typical gasoline retailer enjoys sales of
$1.2 Million annually. What is the price elasticity of demand of a representative gasoline retailer's product?

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Solution Summary

The formula for the Rothschild Index (RI) is applied.

Solution Preview

The formula for the Rothschild Index (RI) is:

RI = (Own Price Elasticity of Market Demand)
...

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