If the price elasticity of demand for Mountain Dew is 4.4 then
Select one:
a. Mountain Dew has a low price elasticity of demand.
b. Mountain Dew has a high price elasticity of demand.
c. Mountain Dew has no substitutes.
d. Mountain Dew is the favorite of many soda drinkers.
Price elasticity of demand = % change in quantity demanded/% change in price
If the price elasticity of demand is
a. Less than 1, then the demand is said to be inelastic
b. equal to 1, then the demand is said to be unitary elastic
c. greater than 1, then the demand is said to be elastic
It is given that the price elasticity of demand for Mountain Dew is 4.4.
This implies that for a unit percentage change in price, the percentage change in the quantity demanded is 4.4.
Therefore, Mountain Dew has a high price elasticity of demand
If a good doesn't have any close substitutes, then the demand for such a good tends to be inelastic.
Ans: b. Mountain Dew has a high price elasticity of demand.
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