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laila [671]
3 years ago
11

If the price elasticity of demand for a product is 2.5, then a price cut from $2.00 to $1.80 will:

Business
1 answer:
saul85 [17]3 years ago
5 0

Answer:

c

Explanation:

Price elasticity of demand measures the responsiveness of quantity demanded to changes in price of the good.

Price elasticity of demand = percentage change in quantity demanded / percentage change in price

If the absolute value of price elasticity is greater than one, it means demand is elastic. Elastic demand means that quantity demanded is sensitive to price changes.  

Demand is inelastic if a small change in price has little or no effect on quantity demanded. The absolute value of elasticity would be less than one

Demand is unit elastic if a small change in price has an equal and proportionate effect on quantity demanded.

Percentage change in price = (1.8 - 2) / 2 = -0.10

2.5 = percentage change in quantity demanded / -0.10

percentage change in quantity demanded = 0.10 x 2.5 = 0.25 = 25%

Because there was a decrease in price, demand would increase by 25%

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1 year ago
A local transit authority charges​ $1 for a bus ride. An economics study suggests that in the price range from​ $0.50 to​ $1.50,
Sunny_sXe [5.5K]

Answer:

To increase its revenue, transit authority should lower the fare.

Explanation:

The 'elasticity of demand' measures the change in consumers response in quantity he demands as a result of the change in price, other factors remaining same.

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3 years ago
Apple is constantly striving to introduce new products into the marketplace. At the initial stage, Apple design teams are separa
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Answer:

Idea generation.

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3 years ago
When there is high unemployment,
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1 year ago
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Answer:

<u>Ensure accurate reliable accounting records</u>

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