Suppose the price elasticity of demand for Good A is 2.4 and the price elasticity of demand for Good B is 1.2. Which of the following statements is consistent with these values?
A. Good A is a luxury and Good B is a necessity.
B. Good A is a good several days after a price increase while Good B is that same good several years after the price increase.
C. Good A is ice cream and Good B is mint chocolate chip ice cream.
D. Good A is salt and Good B is college tuition.
Answer: A
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A) 0.47, which mean cappuccino is inelastic. B) 0.57, which means cappuccino is inelastic. C) 1.75, which means cappuccino is elastic. D) 2.25, which means cappuccino is elastic.
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a. 10 percent b. 95 percent c. 30 percent d. 50 percent e. 75 percent
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