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

question 131

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.
-If the price elasticity of supply is 0.75, it would imply that a _____.

• A)a 100 percent increase in price would increase the quantity supplied by 75 percent
• B)doubling of the price would increase the quantity supplied by 175 percent
• C)50 percent increase in price would increase the quantity supplied by 25 percent
• D)75 percent increase in price would increase the quantity supplied by 100 percent
• E)120 percent increase in price would increase the quantity supplied by 90 percent

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