Question

If the price elasticity of demand for Mountain Dew is 4.4 then

Select one:
a. Mountain Dew is the favorite of many soda drinkers.
b. Mountain Dew has a low price elasticity of demand.
c. Mountain Dew has no substitutes.
d. Mountain Dew has a high price elasticity of demand.

Answer 1

Mountain Dew's price elasticity of demand at 4.4 signifies a high sensitivity of demand in response to price changes, indicating it has a high price elasticity of demand, and likely many substitutes.

Step-by-step explanation:

The price elasticity of demand measures how sensitive the quantity demanded of a good is to a change in its price. When the price elasticity of demand for a product is high (greater than 1), it means that consumers' demand for the product is sensitive to price changes. In the case of Mountain Dew, with a price elasticity of demand at 4.4, this indicates that Mountain Dew has a high price elasticity of demand. Therefore, if the price of Mountain Dew increases, the quantity demanded would decrease significantly, and vice versa. This high elasticity suggests that there are likely many substitutes available for Mountain Dew, as consumers can easily switch to other beverages in response to price changes.

Answer 2

If the price elasticity of demand for Mountain Dew is 4.4 then "mountain dew has a high price elasticity of demand".

Answer: Option D

Step-by-step explanation:

In economics "Price elasticity of demand" (PED) is a metric required to illustrate the flexibility or elasticity of a product or service's required quantity to increase its value when nothing but the value of product vary. When mountain dew have price elasticity of demand is 4.4 this follows that a price increase of 10 percent would result in the quantity needed decline by 44% as illustrated below:

4.4 = (% quantity change) / (% price change)

4.4 = x / 10

x = -4.4 (10) = -44% here negative sign shows decline in quantity required.