Suppose the company that owns the vending machines on your campus has doubled the price of a can of soda. If they then still sell almost the same number of sodas per day, this suggests:
A)students do not have good nutritional information.
B)soda purchases represent a large fraction of students' budgets.
C)there are few other places to purchase soda on campus.
D)the price elasticity of demand for soda is equal to 1.

Question

Quizplus · Accepted Answer

If the price of soda doubles, but the quantity of soda demanded doesn't change, then this suggests that the demand for soda is inelastic. One explanation for this is that there are few other places to buy soda on campus (that is, the soda sold in vending machines has few close substitutes).

Suppose the Company That Owns the Vending Machines on Your