Studies Indicate That the Price Elasticity of Demand for Beer

question 120

Multiple Choice

Studies indicate that the price elasticity of demand for beer is about 0.9.A government policy aimed at reducing beer consumption changed the price of a case of beer from $10 to $20.According to the midpoint method,the government policy should have reduced beer consumption by

• A)30%.
• B)40%.
• C)60%.
• D)74%.

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Definitions:

Ratio Analysis

A quantitative analysis method used to evaluate a company's financial health by calculating ratios from financial statements.

Operating Activities

Transactions and other events that affect the net income of a business, relating to its principal revenue-producing operations.

Statement of Cash Flows

A financial report that summarizes the amount of cash and cash equivalents entering and leaving a company.

Quick Ratio

A liquidity indicator that measures a company's ability to meet short-term obligations with its most liquid assets.