Suppose That the Price of Eggs Increases from 75 Cents

question 59

Multiple Choice

Suppose that the price of eggs increases from 75 cents to $1.00 per dozen and as a result a typical farmer experiences a decrease in egg sales from 300 to 200 dozen per week. Using the method of average values, the absolute price elasticity of demand is

• A) 1.4.
• B) 0.8.
• C) 3.0.
• D) 1.75.

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Definitions:

Price-Discriminating Monopolist

A monopolist that charges different prices to different consumers or groups of consumers, often based on their willingness to pay.

Price Elasticity

A measure of how much the quantity demanded of a good responds to a change in the price of that good, illustrating the sensitivity of demand to price changes.

Separate Markets

Distinct spaces or platforms where goods, services, or financial instruments are traded independently, often with little to no interaction or effect on each other.

Resold

Refers to an item being sold again after its initial purchase.