Assume the Price Elasticity of Demand for JT Chip Co

question 3

Multiple Choice

Assume the price elasticity of demand for JT Chip Co.chips is 4.0.If the company decreases the price of each bag of chips from $1.89 to $1.49,the number of bags sold will

• A)Decrease by 78 percent.
• B)Increase by 95 percent.
• C)Increase by 48 percent.

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Definitions:

Production Alternative C

A specific choice or option in the array of possible production strategies or methods, typically designated in a scenario or case study.

Growth Rate

The proportional increase of some variable within a specific time period, often expressed as a percentage.

Law of Increasing Opportunity Costs

States that as production of a product increases, the cost to produce an additional unit of that product also increases. This is due to resources typically not being equally efficient in producing every good.

Consumer Goods

Products that are purchased for consumption by the average consumer, typically divided into durable goods, nondurable goods, and services.