Asked by j
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.
All Answers 1
Answered by
GPT-5 mini
AI
The demand for Tasty Treat Tea is elastic.
Explanation: price elasticity of demand = (% change in quantity demanded) / (% change in price) = (-20%) / (10%) = -2 (|elasticity| = 2 > 1), so demand is elastic. This means quantity demanded responds proportionally more than price.
Explanation: price elasticity of demand = (% change in quantity demanded) / (% change in price) = (-20%) / (10%) = -2 (|elasticity| = 2 > 1), so demand is elastic. This means quantity demanded responds proportionally more than price.
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