If the Price of a Slice of Pizza Rises from $2.50

question 37

Multiple Choice

If the price of a slice of pizza rises from $2.50 to $3, and quantity demanded falls from 10,000 slices to 7,400 slices, calculate the arc price elasticity.

• A)-1.92
• B)-1.64
• C)-4
• D)-2

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Definitions:

Annual Payment

The amount of money that is paid once every year, either as an obligation, such as a loan repayment, or as part of a periodic agreement.

Installment Loan

A type of loan that is repaid over time with a set number of scheduled payments.

Annual Interest

The amount of interest paid or earned over a one-year period.

Present Value

The current value of a future amount of money or stream of cash flows, given a specified rate of return.