ECONOMICS
DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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If the price of Kellogg’s Corn Flakes goes up from $1.89 to $2.05 and quantity demanded changes from 250 to 210, then the price elasticity of demand would be:
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0.47
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0.02
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250
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2.14
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Explanation:
Detailed explanation-1: -The demand for Kelloggs Corn Flakes is very elastic because consumers have many other options that are near-perfect substitutes. This means that consumers will likely switch to these substitutes if the price rises even a little.
Detailed explanation-2: -If the cross elasticity of demand between chicken chop and lamb chop is 2.5, then a 6% increase in the price of chicken chop will result in. a 10% increases in the quantity demanded of lamb chop.
Detailed explanation-3: -the price elasticity is over 1, so the product is elastic.
Detailed explanation-4: -The price elasticity of demand is calculated as the percentage change in quantity divided by the percentage change in price.
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