If the Price Elasticity of Demand for a Product Is

question 248

Multiple Choice

If the price elasticity of demand for a product is 2 in absolute value, and the price elasticity of supply for the same product is 1, what is the predicted percent change in price from a 5 percent fall in the supply?

• A) a 1.67 percent fall in price
• B) a 1.67 percent rise in price
• C) a 0.6 percent fall in price
• D) a 0.6 percent rise in price

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