Let the Price Elasticity of Demand for a Soft Drink

question 42

Multiple Choice

Let the price elasticity of demand for a soft drink be - 2. In the year 2005, the per capita consumption of soft drinks was about 500 cans per person, and the average price was $1.00 per can. If we suppose that demand for the soft drink is linear, Q^d = a - bP, where a and b are constants, Q^d is quantity demanded and P is price, an estimate of the demand equation could be:

• A) Q^d = 100 - 2P
• B) Q^d = 1500 - 2P
• C) Q^d = 1500 - 1000P
• D) Q^d = 1000 - 1500P

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