Block's Sells 500 Bottles of Perfume a Month When the Price

question 77

Multiple Choice

Block's sells 500 bottles of perfume a month when the price is $7.A huge increase in resource costs causes price to rise to $9 and Block's only manages to sell 460 bottles of perfume.The price elasticity of demand is:

• A) 0.33 and elastic.
• B) 3.0 and elastic.
• C) 0.33 and inelastic.
• D) 3.0 and inelastic.
• The change in quantity is (500 - 460)/(500 + 460)= 0.0417 and the change in price is (7 - 9)/(7 + 9)= 0.125.Elasticity,then is 0.0417/0.125 = 0.33.

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