When the Price of Good a Is $50, the Quantity

question 175

Multiple Choice

When the price of good A is $50, the quantity demanded of good A is 500 units. When the price of good A rises to $70, the quantity demanded of good A falls to 400 units. Using the midpoint method, the price elasticity of demand for good A is

• A)1.50, and an increase in price will result in an increase in total revenue for good A.
• B)1.50, and an increase in price will result in a decrease in total revenue for good A.
• C)0.67, and an increase in price will result in an increase in total revenue for good A.
• D)0.67, and an increase in price will result in a decrease in total revenue for good A.

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