When the price of ice cream rises from $3 to $5 a scoop, the quantity of ice cream bought decreases by 10 percent. The price elasticity of demand for ice cream is _______
A. 5
B. 0.2
C. 50
D. 2.5
B The percentage change in the price is equal to ($2/$4) × 100, which is 50 percent. The price elasticity of demand is equal to (10 percent) ÷ (50 percent), which is 0.2 .
Economics
You might also like to view...
One of the most serious weaknesses in the Medicare system is that
a. patients are not able to choose their own physicians. b. the definition of an episode of illness is too restrictive. c. it provides poor insurance coverage for unusually long hospital stays. d. patients must pay a deductible every time they enter the hospital. e. Part B is voluntary.
Economics
If a company has a cost curve of TC = 300 + 2Q + Q2 and it produces 300 units per day, then its marginal cost is
A. $600. B. $2.02. C. $602. D. $1.
Economics