In the Market for Backpacks, 100 Backpacks Are Sold at $40

question 151

Multiple Choice

In the market for backpacks, 100 backpacks are sold at $40 each. Then a fall in wages results in sales of 500 backpacks at a price of $20 each. Using the midpoint method, what is the absolute value of the elasticity of demand for backpacks?

• A) 0.125
• B) 0.5
• C) 2
• D) 8

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Definitions:

Geographical Markets

Areas or locations where products or services are marketed, each with its own set of customers with distinct needs and characteristics.

Pharmaceutical Companies

Businesses licensed to research, develop, market, and distribute drugs in the healthcare sector, often focusing on novel or generic drug manufacturing.

BRIC Countries

An acronym for Brazil, Russia, India, and China, referring to rapidly developing countries considered as emerging markets or economic giants.

Product Life Cycle

The stages a product goes through from development and introduction to the market, through growth, maturity, and decline.