Suppose That the Quantity of Lemonade Demanded Falls from 103

question 95

Multiple Choice

Suppose that the quantity of lemonade demanded falls from 103 000 litres per week to 97 000 litres per week as a result of a 10 percent increase in its price. The price elasticity of demand for lemonade is therefore

• A) 6.0.
• B) 1.03.
• C) 0.6.
• D) 1.97.
• E) impossible to compute unless we know the before and after prices.

---

Definitions:

Direct Materials

Raw materials that are directly traceable to the manufacturing of a product.

Uncollectible

Debt or receivables that are considered impossible to collect, potentially due to the debtor's inability to pay.

Budgeted Cash Disbursements

Budgeted cash disbursements are forecasted cash payments during a specific period, part of cash flow planning.

Bad Debts

Accounts receivable that are considered uncollectible and are written off as a loss.