As the Price of Bananas Fell from $0

question 281

Multiple Choice

As the price of bananas fell from $0.60 to $0.40 per pound, the quantity demanded rose from 300 pounds of bananas consumed to 500 pounds of bananas consumed. The price elasticity of demand (using the midpoint method) is

• A) 0.80.
• B) 1.00.
• C) 1.25.
• D) 1.50.

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Definitions:

Goal Seek Analysis

A function in spreadsheet software that finds the input value needed to achieve a specified goal.

Inputs

Resources, materials, or information that are used in the production process to create goods or services.

Outputs

The final products or results generated by a system, process, or activity.

Contribution Margin Ratio

A financial metric indicating the portion of sales revenue that exceeds variable costs and contributes to covering fixed costs and generating profit.