Pepsi has found that consumers will purchase ten cases of Pepsi One at $5.00 a case; however,in order to increase demand,they price twelve cases at $4.00 a case.They decide to calculate the _________ and find the answer to be -0.81.
A)marginal revenue
B)price elasticity of demand
C)average demand
D)marginal demand

Question

Quizplus · Accepted Answer

The calculation of -0.81 indicates the price elasticity of demand, which measures the responsiveness of quantity demanded to a change in price. It shows how much the quantity demanded changes in percentage terms when the price changes by one percent. In this case, the price elasticity of demand is considered in order to determine the effect of the price change on demand, which is important for the company's sales and revenue objectives.

Pepsi Has Found That Consumers Will Purchase Ten Cases of Pepsi