1. Suppose the own price elasticity of market demand for retail gasoline is 0.9, the Rothschild index is 0.4, and a typical gasoline retailer enjoys sales of $1,700,000 annually. What is the price elasticity of demand for a representative gasoline retailer's product?

Instruction: Enter your response rounded to two decimal places. If entering a negative number, be sure to use the negative () sign.

2. A firm has $1,300,000 in sales, a Lerner index of 0.64, and a marginal cost of $40, and competes against 900 other firms in its relevant market. Instruction: Enter your responses rounded to two decimal places. a. What price does this firm charge its customers?

b. By what factor does this firm mark up its price over marginal cost?