Suppose the Quantity of Root Beer Demanded Decreases from 105,000

question 120

Multiple Choice

Suppose the quantity of root beer demanded decreases from 105,000 litres per week to 95,000 litres per week when the price rises by 5 percent. The price elasticity of demand

• A)is 2.0.
• B)is 0.5.
• C)is 10.
• D)is inelastic.
• E)cannot be computed unless we know the original price and the new price.

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