A rise in the price of a smoothie from $2 to $3 results in a decrease in the quantity of smoothies demanded from 220 million to 180 million a day and at today's price of a muffin, $1.50, the quantity of muffins demanded increases from 80 million to 100 million a day. 1. calculate the percentage change in the price of a smoothie and the percentage change in the quantity demanded of smoothies. hint: use the average price and average quantity to calculate the percentage changes. the price of a smoothie changes by nothing percent and the quantity demanded of smoothies changes by nothing percent.

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Business

Karley Sellers

2 October, 16:55

A rise in the price of a smoothie from $2 to $3 results in a decrease in the quantity of smoothies demanded from 220 million to 180 million a day and at today's price of a muffin, $1.50, the quantity of muffins demanded increases from 80 million to 100 million a day. 1. calculate the percentage change in the price of a smoothie and the percentage change in the quantity demanded of smoothies. hint: use the average price and average quantity to calculate the percentage changes. the price of a smoothie changes by nothing percent and the quantity demanded of smoothies changes by nothing percent.

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Hudson Aguirre · Answer 1

Answer: C

The total revenue test tells us that when demand is inelastic, a rise in the price increases total revenue. The price elasticity of demand is 0.9, so the demand for CDs is inelastic.