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If gas stations are essentially identical firms, the market elasticity of demand for gas is -0.1,...

  1. If gas stations are essentially identical firms, the market elasticity of demand for gas is -0.1, each firm’s elasticity of supply is 0, and there are 120,000 gas stations in the U.S., each firm’s residual elasticity of demand would be what?

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Answer #1

Each firm’s residual elasticity of demand would be also -0.1

Explanation:

the market elasticity of demand is same as each firm’s residual elasticity of demand.

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