Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
B → A → C → D
B
B → C → A → D
C
A → B → C → D
D
B → A → D → C
Understanding the Answer
Let's break down why this is correct
Answer
First, note the starting price and quantity demanded (step B). Next, find how the price has changed and compute its percentage change (step C). Then calculate how much the quantity demanded has changed and express that as a percentage (step A). Finally, plug those two percentage changes into the elasticity formula to get the elasticity value (step D). For example, if the price rises from $10 to $12 (20% increase) and quantity falls from 100 to 80 (20% decrease), the elasticity is –1.
Detailed Explanation
First you need the starting price and quantity, because you cannot compare changes without a baseline. Other options are incorrect because This order skips the first step of finding the percentage change in quantity, so you would try to use a formula without knowing how much the quantity moved; It starts with the quantity change before knowing the initial price and quantity, so you have no reference point for the change.
Key Concepts
Price Elasticity of Demand
Demand and Supply
Market Equilibrium
Topic
Price Elasticity of Demand
Difficulty
easy level question
Cognitive Level
understand
Practice Similar Questions
Test your understanding with related questions
1
Question 1A company notices that when they increase the price of their product by 10%, the quantity demanded decreases by 20%. How can the company use this information regarding price elasticity of demand to make strategic pricing decisions in the future?
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2
Question 2Arrange the following steps in the correct order to analyze market equilibrium when a new product is introduced: A) Identify shifts in demand and supply curves, B) Determine the new equilibrium price and quantity, C) Assess consumer preferences and potential market size, D) Analyze the impact of external factors on supply and demand.
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3
Question 3If the price of a luxury car increases by 10% and the quantity demanded decreases by 15%, what does this indicate about the price elasticity of demand?
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