Suppose the Price of a Cookie Is $2

question 46

Multiple Choice

Suppose the price of a cookie is $2.50 and the quantity demanded is 50. When the price drops to $1, the quantity demanded increases to 200. Using the midpoint method, what is the price elasticity of demand?

• A) −1.40
• B) −0.72
• C) −140
• D) −7.2

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Definitions:

Effort

The amount of physical or mental energy expended to achieve a goal.

Incremental Theorist

A person who believes that abilities and intelligence can be developed through effort, practice, and dedication.

Entity Theorist

A person who believes that personal attributes such as intelligence or talent are fixed traits rather than qualities that can be developed.

Traits

Enduring and distinct characteristics of an individual's personality that are consistent across different situations and time.