In the Village of Frankfurter, the Demand Function for Sausages

question 72

Multiple Choice

In the village of Frankfurter, the demand function for sausages per person is D(p) = 20 - 1.5p, where p is the price of a single sausage.The present population of Frankfurter is 100 persons.Suppose that 10 more people move into town, each of whom has the same demand function as the old residents.At a price of $2, the price elasticity of demand for sausages in Frankfurter is

• A)increased by 10%.
• B)decreased by 10%.
• C)unchanged.
• D)increased by 15%.
• E)none of the above.

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Definitions:

Finished Goods Inventory

The stock of completed products ready for sale, representing one of the final stages in the production process.

Sales Forecast

An estimate of future sales, often based on historical data, current market trends, and forward-looking economic indicators, used for planning and decision-making purposes.

Production Units

The measure of output from a production process, with each unit representing a completed item.

Plant Assets

Long-term tangible assets used in the operation of a business that are not intended for resale, such as machinery, buildings, and vehicles.