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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:

Respuesta :

Answer:

Given that,

Percent Change in prices = 10%

Percent Change in quantity demanded = 20%

Therefore,

Price elasticity of demand = [tex]\frac{Percent Change in quantity demanded}{Percent Change in prices}[/tex]

Price elasticity of demand = [tex]\frac{20}{10}[/tex]

Price elasticity of demand  = 2

Hence, price elasticity of demand is greater than 1 which means that the Tasty Treat Tea has a elastic demand.

divorcedspiderman

B. The demand for Tasty Treat Tea is elastic.

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