Table 16-2

Neem Products sells its Ayurvedic Neem toothpaste in two completely isolated markets with demand schedules as shown in Table 16-2. The average cost of production is constant at $2 per tube.
-Refer to Table 16-2.Which of the following statements is true about the two markets?
A)The demand in Middle Fall is more price elastic than the demand in West Fall.
B)The demand in Middle Fall is less price elastic than the demand in West Fall.
C)The demand in Middle Fall is more income elastic than the demand in West Fall.
D)The demand in Middle Fall is less income elastic than the demand in West Fall.

Question

Table 16-2
  
Neem Products sells its Ayurvedic Neem toothpaste in two completely isolated markets with demand schedules as shown in Table 16-2. The average cost of production is constant at $2 per tube.
-Refer to Table 16-2.Which of the following statements is true about the two markets?
A)The demand in Middle Fall is more price elastic than the demand in West Fall. 
B)The demand in Middle Fall is less price elastic than the demand in West Fall. 
C)The demand in Middle Fall is more income elastic than the demand in West Fall. 
D)The demand in Middle Fall is less income elastic than the demand in West Fall.

Quizplus · Accepted Answer

The demand in West Fall has a price elasticity of -2.5, while the demand in Middle Fall has a price elasticity of -1.5. Since the absolute value of the elasticity is smaller for Middle Fall, it indicates that the demand in that market is less responsive to changes in price, making it less price elastic than West Fall. Therefore, option B is correct. There's no information in the table that would suggest which market is more or less income elastic, making options C and D incorrect. A is also incorrect as it contradicts the actual data in the table.

Table 16-2 Neem Products Sells Its Ayurvedic Neem Toothpaste in Two Completely