Scenario 5.1
The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2P x . Assume that P = $8, I = 200, and P x = $10.
-If demand is unit-elastic, then a $5 decrease in price will lead to an increase in quantity demanded by 5 units.

Question

Quizplus · Accepted Answer

We cannot determine if a $5 decrease in price will lead to an increase in quantity demanded by 5 units based solely on the information given about the demand equation. The elasticity of demand would need to be calculated.

Scenario 5.1 The Demand for Noodles Is Given by the Following Equation