We know that the demand for Cola is elastic. Suppose we observe that the price of Cola decreased by 50%. What can we say about the resulting change in quantity demanded? a. what is elasticity, anyway? b. it increased by more than 50%c. it increased by less than 50%d. it decreased

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Business

Giuliana Vang

16 December, 16:59

We know that the demand for Cola is elastic. Suppose we observe that the price of Cola decreased by 50%. What can we say about the resulting change in quantity demanded? a. what is elasticity, anyway? b. it increased by more than 50%c. it increased by less than 50%d. it decreased

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Koen French · Answer 1

The correct answer is option b.

Explanation:

When the demand for a commodity is said to be elastic, it means that a proportionate change in price causes more than proportionate change in the quantity demanded.

Here, the demand for cola is considered to e elastic. Now, there is a 50% decrease in its price. This will cause the quantity demanded to increase by more than 50%.

So, option b will be the correct answer.