A value of the absolute price elasticity of demand equal to 0.5 indicates that
A) a 5 percent increase in price leads to a 10 percent decrease in quantity demanded.
B) a 10 percent increase in price leads to a 5 percent decrease in quantity demanded.
C) a 0.5 percent increase in price leads to a 1 percent decrease in quantity demanded.
D) a 1 percent increase in price leads to a 5 percent decrease in quantity demanded.
Answer: B
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Which of the following statements about advertising is true?
a. Advertising lowers the price of a product. b. Advertising lowers the total cost of obtaining a good. c. Advertising has no economic value. d. Advertising increases the opportunity cost of time.