Suppose a Fast-Food Chain Determines That the Price Elasticity of Demand

question 38

Multiple Choice

Suppose a fast-food chain determines that the price elasticity of demand for its hamburgers is 1.7,and the price of the hamburger is currently $4.00.What will be the effect on quantity demanded and total expenditure on this chain's hamburgers if the price is increased to $6.00?

• A)Quantity demanded will fall by 68% and total expenditure will decrease.
• B)Quantity demanded will fall by 11.76% and total expenditure will decrease.
• C)Quantity demanded will fall by 17% and total expenditure will increase.
• D)Quantity demanded will fall by 1.7% and total expenditure will increase.
• E)Quantity demanded will fall by 34% and total expenditure will decrease.

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