Table 7-1

-Refer to Table 7-1.If the price increases from $1.00 to $1.50,
A)the market demand decreases by 20 units.
B)individual demand curves,when drawn,will shift to the left.
C)the quantity demanded in the market decreases by 2 units.
D)the quantity demanded in the market decreases by 7 units.

Question

Table 7-1
 
-Refer to Table 7-1.If the price increases from $1.00 to $1.50,
A)the market demand decreases by 20 units. 
B)individual demand curves,when drawn,will shift to the left. 
C)the quantity demanded in the market decreases by 2 units. 
D)the quantity demanded in the market decreases by 7 units.

Quizplus · Accepted Answer

Since the price of the product has increased, the quantity demanded in the market will decrease. Based on the data provided in Table 7-1, the price elasticity of demand is -3.5. Using the formula: % Change in quantity demanded = % Change in price x Price elasticity of demand, we can calculate that the quantity demanded will decrease by 7 units ((50%-33.3%) x -3.5 = -16.7). Therefore, the best choice is D.

Table 7-1 -Refer to Table 7-1.If the Price Increases from $1.00 to Increases