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The market for wheat in Elbonia can be represented by the following equations, where the price (P) is measured in dollars and the quantity Q
The market for wheat in Elbonia can be represented by the following equations, where the price (P) is measured in dollars and the quantity Q is measured in metric tonnes.
P = 400 - Q
P = 50 + 4Q
1. Calculate the price elasticity of demand when price increases from $200 to $210
2. Calculate the price elasticity of supply when the price decreases from $170 to $150.
3. Will your answers change if I tell you that the quantity is measured in thousands of metric tonnes rather than just metric tonnes? Explain your answer.
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