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The Only Producer of Chocolate Bunnies in the World, Choco's

Question 14

Multiple Choice

The only producer of chocolate bunnies in the world, Choco's Bunny Company, recently expanded its production capacity from 1,000 to 2,000 bunnies per day. If the price elasticity of demand for bunnies is 3.33, by how much will the company have to reduce its price to sell the additional 1,000 bunnies (by the midpoint method) ?


A) 2.5%
B) 25%
C) 125%
D) 20%

Correct Answer:

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