At Tony's Restaurant, the quantity of large pizzas sold is 200 at the unit price $15. Suppose the price elasticity of demand for pizzas by the initial value method is 1.5, and you would like to increase the quantity sold to 250. Then the new price must be:
A. $13.
B. $12.50.
C. $11.50.
D. $11.25.
Answer: B
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An advantage of a flexible exchange rate system relative to a fixed system is that in a flexible rate system
a. currency speculation will be reduced. b. balance of payments surpluses and deficits can be dealt with using fiscal policy, not monetary policy. c. inflation will be minimized by the "discipline of the balance of payments." d. the price of imported goods will be kept relatively low. e. none of the above.
Empirical research has shown that:
A. during the 1980s and 1990s, the velocity of money actually decreased as the opportunity cost of holding money increased. B. in the 1990s and 2000s, velocity was less sensitive to an increase in the opportunity cost of holding money than in the 1980s. C. in the 1990s and 2000s, velocity was more sensitive to an increase in the opportunity cost of holding money than in the 1980s. D. during the 1980s and 1990s, the velocity of money was not sensitive to changes in the opportunity cost of holding money.
When does an externality occur?
a. when one person's production or consumption of a good affects another person b. when a producers long-run average costs fall c. when a consumer's marginal utility from consuming a good increases d. when international trade leads to improvement in a country's economic welfare
The OPEC oil shocks in 1973-1974 are an example of:
A) favorable supply shock, shifting the short-run aggregate supply curve rightward.
B) favorable supply shock, shifting the short-run aggregate supply curve leftward.
C) adverse supply shock, shifting the short-run aggregate supply curve rightward.
D) adverse supply shock, shifting the short-run aggregate supply curve leftward.