Scenario 5.1 The Demand for Noodles Is Given by the Following Equation

question 53

Multiple Choice

Scenario 5.1
The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2P_x. Assume that P = $8, I = 200, and P_x = $10.
-When the supply elasticity of a product is 2.5, a 10 percent decrease in price will _____ the quantity supplied of the product by _____ percent.

• A)increase; 25
• B)decrease; 25
• C)increase; 2.5
• D)decrease; 2.5
• E)decrease; 4

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