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Suppose demand and supply have constant elasticity equal to -3 and 2 respectively. What would happen to

equilibrium price and quantity when the demand decreases by 5%?

Select one:

a. Price falls by 1% and quantity falls by 3%.

b. Price falls by 5% and quantity falls by 10%.

c. Price falls by 2.5% and quantity falls by 5%.

d. Price falls by 1% and quantity falls by 2%.

Top Answer

d. Price falls by 1%... View the full answer


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