Author Question: A local Krispy Kreme doughnut shop reduced the price of its doughnuts from 4 per dozen to 3.50 per ... (Read 72 times)

naturalchemist · **on:** Jun 30, 2018

A local Krispy Kreme doughnut shop reduced the price of its doughnuts from 4 per dozen to 3.50 per dozen, and as a result, the daily sales increased from 300 to 400 dozen. This indicates that the price elasticity of demand for the doughnuts was:
a. elastic.
b. inelastic.
c. of unitary elasticity.
d. indeterminate; more information is needed to determine the price elasticity of demand.

Question 2

If the quantity demanded increases by 20 percent in response to a 10 percent decrease in price, demand is classified as:
a. unstable.
b. relatively inelastic.
c. relatively elastic.
d. of unitary elasticity.