If a 50 Percent Increase in the Price of Pizza

question 117

Multiple Choice

If a 50 percent increase in the price of pizza results in a 25 percent decrease in the quantity demanded of pizza,then the elasticity of demand for pizza:

• A)is equal to 0.5 and demand is inelastic.
• B)is equal to 0.5 and demand is elastic.
• C)is equal to 2 and is elastic.
• D)is equal to 2 and is inelastic.
• E)cannot be determined from the information provided.

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Definitions:

Variability

A measure of the spread or dispersion of a set of data points within a dataset.

Regression Equation

A mathematical formula used to predict a dependent variable based on one or more independent variables.

Criterion

A standard or rule by which something can be judged or measured.

Correlation

A statistical measure that expresses the extent to which two variables change together, but does not necessarily imply causation.