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23 September, 00:27

Walmart is thinking about offering a 25% discount on a brand of shoes. If the elasticity of demand is two, then the discount would increase sales by: A. 50%. B. 2%. C. 200%. D. 25%.

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  1. 23 September, 00:52
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    A. 50%.

    Explanation:

    The price elasticity of demand formula is:

    PED = Change in quantity demanded / change in price

    plugging the amounts into the formula we obtain:

    2 = X / 25%

    Now, simply solve for X:

    2 x 25% = X

    50% = X

    Thus, the total quantity demanded would increase by 50%
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