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15. Suppose the price of 40 inch LCD televisions decreases by 20%. If their price elasticity of demand is 0.85, then this price decrease will cause a:
a. 25% decrease in quantity demanded
b. 13% decrease in quantity demanded
c. 9% decrease in quantity demanded
d. 7% decrease in quantity demanded
e. 6% decrease in quantity demanded
Please show all work
15. Suppose the price of 40 inch LCD televisions decreases by 20%. If their price elasticity of demand is 0.85, then this price decrease will cause a:
a. 25% decrease in quantity demanded
b. 13% decrease in quantity demanded
c. 9% decrease in quantity demanded
d. 7% decrease in quantity demanded
e. 6% decrease in quantity demanded
Ritu KharbLv5
28 Sep 2019
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Could anyone help me understand how to go about solving this question? I would also like to learn how to set it up. Thank you.
1) Suppose the market demand curve for a good is represented by the linear equation Q = 100 - 0.5P. If the market price were to decrease from P = $40 to P = $30, then holding all other factors constant:
| A) | the quantity demanded would increase by 10 units and total expenditures on the good would increase by $300 |
| B) | the quantity demanded would increase by 5 units and total expenditures on the good would decrease by $650 |
| C) | the quantity demanded would increase by 85 units and total expenditures on the good would increase by $2550 |
| D) | the quantity demanded would decrease by 15 units and total expenditures on the good would decrease by $450 |
| E) | the quantity demanded would decrease by 5 units and total expenditures on the good would increase by $150 |
| F) | the quantity demanded would decrease by 25 units and total expenditures on the good would increase by $750 |
