Scenario 5.1 The Demand for Noodles Is Given by the Following Equation

question 110

Multiple Choice

Scenario 5.1
The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2P_x. Assume that P = $8, I = 200, and P_x = $10.
-Ceteris paribus, if a 20 percent increase in the price of shoes leads to a 10 percent increase in the quantity supplied of shoes, then the price elasticity of supply is equal to _____.

• A)2
• B)20
• C)10
• D)0.5
• E)0.2