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

question 45

Multiple Choice

Suppose a fast-food chain determines that the price elasticity of demand for its hamburgers is 0.75,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 30%,and total expenditure will increase.
• B)Quantity demanded will fall by 40%,and total expenditure will increase.
• C)Quantity demanded will fall by 75%,and total expenditure will increase.
• D)Quantity demanded will fall by 0.3%,and total expenditure will decrease.
• E)Quantity demanded will fall by 0.4%,and total expenditure will decrease.

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