According to Table 2.1,which presents hypothetical data on price elasticity of demand,which of the following is true about lamb?
A) Each 2.7% change in the price of lamb causes a 1% change in the quantity demanded of lamb.
B) The demand for lamb is inelastic.
C) Each 1% change in the price of lamb causes a 2.7% change in the quantity demanded of lamb.
D) Lamb is a normal good.

Question

According to Table 2.1,which presents hypothetical data on price elasticity of demand,which of the following is true about lamb? 
A) Each 2.7% change in the price of lamb causes a 1% change in the quantity demanded of lamb. 
B) The demand for lamb is inelastic. 
C) Each 1% change in the price of lamb causes a 2.7% change in the quantity demanded of lamb. 
D) Lamb is a normal good.

Quizplus · Accepted Answer

According to Table 2.1, the price elasticity of demand for lamb is -2.7, which means that a 1% change in the price of lamb causes a 2.7% change in the quantity demanded of lamb. Therefore, option C is correct. Option A is incorrect because the direction of the change is the opposite. Option B is also incorrect because the price elasticity of demand for lamb is greater than 1, indicating that the demand is elastic. Option D is irrelevant to the question.