A Local Restaurant Has Estimated That the Price Elasticity of Demand

question 82

Multiple Choice

A local restaurant has estimated that the price elasticity of demand for meals is equal to 2.If the restaurant increases menu prices by 5%, they can expect the number of customers to decrease by ________and total revenue to _.

• A)10%; increase
• B)5%; stay constant
• C)10%; fall
• D)2.5%; fall

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Definitions:

Scatterplot Strength

Indicative of the degree of correlation between two variables represented in a scatterplot, showing how closely the data points fit a trend line.

Curve Following

The practice of tracing the path or line that best fits the pattern of a dataset, often used in trend analysis.

Sample Variance

The measure of variation or spread within a sample set of data, calculated by averaging the squared deviations from the sample mean.

Population Variance

A measure of the dispersion of a set of data points in a population from their mean value, representing how spread out the population values are.