1. Hank Hill sells propane gas in a competitive
market. He reads an article that indicates that the price
elasticity of demand for propane across the US is inelastic. He immediately raises his price as a result of this
information. First, why would Hank do this and, second, why will he be very disappointed as a result
He is wrong as the market is competitive and all firms are selling same propane at a lower price now than Hanks. The result will be consumers will shift to other sellers with lower price. A rational consumer will buy the same quality propane from a seller with lower price. The market is so single seller cannot affect the market price.
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