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NEW QUESTION: 1
The price decreases from $2,000 to $1,800. Quantity demanded per year increases from 5000 to
6 000 units. Which of the following is correct?
A. The price elasticity of demand is -2.
B. The good is inferior.
C. Income elasticity is + 0.5.
Answer: A
Explanation:
The percentage change in demand is +20%; the percentage change in price is -10% so the price elasticity of demand is -2.

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