If a 4 Percent Increase in the Price of Pepper

question 169

Multiple Choice

If a 4 percent increase in the price of pepper results in a 1 percent decrease in pepper sales, what is the absolute value of the price elasticity of demand for pepper? Is it elastic or inelastic?

• A) 4; elastic
• B) 0.25; elastic
• C) 4; inelastic
• D) 0.25; inelastic

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Definitions:

Cash

Money in the form of coins or banknotes, especially that held to conduct day-to-day transactions.

Opportunity Cost

The benefit that is missed or given up when an investor, individual, or business chooses one alternative over another.

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An intended or suggested way of utilizing something, often laid out in plans or discussions before implementation.

Cash

Physical money, such as coins and bills, or balances in checking or savings accounts, available for use immediately.