Answered: A late spring freeze resulted in a…

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter6: Elasticities

Section: Chapter Questions

Problem 1P

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A late spring freeze resulted in a smaller crop of peaches. Because of a 30% reduction in output, there was a 15% increase in price. Which of these responses is the best estimate of the price elasticity of demand for peaches?

Select one:

A.-2

B.-0.5

C.2

D.0.5

2. The elasticity of demand for electric cars is estimated to be -2. Tesla currently sells 250,000 vehicles per year. Suppose Tesla cut its prices by 10 percent. What would happen to sales?

Select one:

A.Decrease by 5 percent

B.Increase by 5 percent

C.Decrease by 20 percent

D.Increase by 20 percent

( Please solve Both the question. I will definitely give you thumbs up )

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