Question
Tasty Treat Tea is a popular iced tea drink. When the manufacturer begins to use imported tea leaves, the price rises by 10%, and the quantity demanded falls by 20%.
The fact that quantity demanded changed by more than the price change suggests that
The consumer no longer prefers the iced tea drink.
The demand for Tasty Treat Tea is elastic.
The demand for Tasty Treat Tea is inelastic.
The consumer no longer shops at Tasty Treat Tea.
The fact that quantity demanded changed by more than the price change suggests that
The consumer no longer prefers the iced tea drink.
The demand for Tasty Treat Tea is elastic.
The demand for Tasty Treat Tea is inelastic.
The consumer no longer shops at Tasty Treat Tea.
Answers
GPT-4o mini
The situation described indicates that a 10% increase in price led to a 20% decrease in the quantity demanded. This significant change suggests that the demand for Tasty Treat Tea is responsive to price changes.
In economic terms, if the percentage change in quantity demanded is greater than the percentage change in price, the demand is considered elastic. In this case:
- Price Increase: 10%
- Quantity Decrease: 20%
Since the quantity demanded fell by a larger percentage than the price increase, we conclude that the demand for Tasty Treat Tea is elastic.
Therefore, the correct answer is:
**The demand for Tasty Treat Tea is elastic.**
In economic terms, if the percentage change in quantity demanded is greater than the percentage change in price, the demand is considered elastic. In this case:
- Price Increase: 10%
- Quantity Decrease: 20%
Since the quantity demanded fell by a larger percentage than the price increase, we conclude that the demand for Tasty Treat Tea is elastic.
Therefore, the correct answer is:
**The demand for Tasty Treat Tea is elastic.**