Suppose That a Local Supermarket Sells Apples and Oranges for 50

question 141

Multiple Choice

Suppose that a local supermarket sells apples and oranges for 50 cents apiece,and at these prices is able to sell 100 apples and 200 oranges per week.One week,the supermarket lowered the price per apple to 40 cents and sold 120 apples.The next week,they lowered the price per orange to 40 cents (after raising the price per apple back to 50 cents) and sold 240 oranges.These results imply that the

• A)price elasticity of apples is lower than the price elasticity of oranges
• B)price elasticity of apples is higher than the price elasticity of oranges
• C)demand for apples is more price sensitive than the demand for oranges
• D)demand for oranges is more price sensitive than the demand for apples
• E)price elasticities of demand for apples and oranges are the same over these price ranges

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Definitions:

Money Market Instrument

Short-term debt instruments, typically with maturities of less than one year, traded in the money market, including treasury bills, commercial paper, and certificates of deposit.

Maturity

The expiration date of a financial instrument, at which point the principal is to be paid back to investors.

Emerging Market Country

Refers to a nation with social or business activity in the process of rapid growth and industrialization.

Brazil

A South American country known for its diverse culture, rainforest, and large economy, also a significant player in global agricultural and energy markets.