Using the guideposts to economic thinking, explain how the market system efficiently performs the functions of communication, cordination, and
September 3, 2020
Consider the 2 2 production model. Production functions are given by:
September 3, 2020

The owner of a small chain of gasoline station in a large Midwestern town read an article in a trade publication stating that the own-price elasticitiy of the demand for gasoline in the United States is –0.2? Because of this highly inelastic demand in the United States, he is thinking about rasining prices to increase revenues and profits. Do you recommend this strategy based on the information he has obtained?

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