If the Price of Pepsi-Cola Increases from 40 Cents to 50

question 96

Multiple Choice

If the price of Pepsi-Cola increases from 40 cents to 50 cents per can and the quantity demanded decreases from 100 cans to 50 cans, then the value of the price elasticity of demand for Pepsi-Cola is:​

• A)−0.5.
• B)−0.25.
• C)−1.
• D) −3.
• E) −2.

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Definitions:

Aggregate Demand

The total demand for goods and services within a particular market or economy at a given price level and period.

Equilibrium Output

The level of output where the quantity of goods produced equals the quantity of goods consumed, resulting in a stable economy.

Government Expenditure

The total amount of spending by a government on goods, services, and public works.

Output

The quantity of goods or services produced in a given period by a firm, industry, or country.