Suppose that the quantity of root beer demanded decline from 103000 gallons per week to 97000 gallons per week as a consequences of a 10 percent increase in the price of root beer. The price elasticity of demand is?
Answers
Answer:
Suppose that the quantity of beer demanded falls from 103,000 liters per week to 97,000 liters...
Question:
Suppose that the quantity of beer demanded falls from 103,000 liters per week to 97,000 liters per week as a result of a 10 percent increase in its price. The price elasticity of demand for beer is therefore:
A) 0.6.
B) 6.0.
C) 1.97.
D) 1.03
E) impossible to compute unless we know the before and after prices.
Price Elasticity of Demand:
Price elasticity of demand is an economic measure which shows the change in quantity demanded of a good due to the change in price of a good. Price elasticity of demand can be measured by dividing the percentage change in quantity demanded by the percentage change in price.
Answer and Explanation: 1
Become a Study.com member to unlock this answer! Create your account
View this answer
The correct answer is:
B. 6
Given:
Initial Quantity Q0 = 103000
Final Quantity Q1 = 97000
Change in Quantity demanded = 103000 - 97000 = 6000.