Table 5-1
Suppose a coffee shop faces the following demand schedule for coffee. $\begin{array}{|c|c|}
\hline \text { Price per coffee (\$) } & \text { Quantity demanded } \
\hline 4.00 & 200 \
\hline 3.00 & 600 \
\hline 2.50 & 800 \
\hline 2.00 & 1000 \
\hline 1.50 & 1200 \
\hline 1.00 & 1400 \
\hline
\end{array}$
-Referring to Table 5-1, comparing the sales at $1.00 and $3.00, which of the statements below is true?
A)the price elasticity of demand is higher at $3.00 than $1.00
B)the price elasticity of demand is lower at $3.00 than at $1.00
C)the price elasticity of demand is the same at both prices
D)the price elasticity of demand at $3.00 is zero

Question

Quizplus · Accepted Answer

At $3.00, the quantity demanded decreases from 200 to 160, a 20% drop, while the price increases by 200%, which indicates that demand is relatively more elastic at $3.00 compared to $1.00. Therefore, the price elasticity of demand is higher at $3.00 than at $1.00.

Table 5-1 Suppose a Coffee Shop Faces the Following Demand

Table 5-1
Suppose a Coffee Shop Faces the Following Demand