Suppose That 300 Bottles of Soda Are Demanded at a Particular

question 151

Multiple Choice

Suppose that 300 bottles of soda are demanded at a particular price.If the price of a bottle of soda rises from that price by 6 percent,the number of bottles of soda demanded falls to 275.Using the midpoint approach to calculate the price elasticity of demand,it follows that the

• A)demand for bottles of soda in this price range is perfectly elastic.
• B)price increase will increase the total revenue of soda sellers.
• C)price elasticity of demand for bottles of soda in this price range is about 0.69.
• D)price elasticity of demand for bottles of soda in this price range is about 1.45.

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Definitions:

Elasticity of Demand

This refers to the measure of how much the quantity demanded of a good or service changes in response to a change in its price.

Marginal Cost

The heightened cost incurred by the production of an additional unit of a good or service.

Monopoly Power

Monopoly power refers to the ability of a single provider to control the market for a good or service, enabling them to set prices without concern for competition.

Short-run

A period in which at least one input is fixed, limiting the ability of the firm to adjust its production levels.