Neem Products sells its ayurvedic neem toothpaste in two completely isolated mar

Question

Neem Products sells its ayurvedic neem toothpaste in two completely isolated markets with demand schedules as shown in the table to the right. The average cost of production is constant at $2 per tube Quantity demanded in Quantity demanded in West Fall Price per tube (S) Price per tube ($) Middle Fatbe Which of the following statements is true about the two markets? (tubes per week) (tubes per week) 5.00 4.50 4.00 3.50 3.00 0 A. The demand curve for Middle Fall is more price elastic than the demand for West Fall 4 5 4 B. The demand curve for Middle Fall is more income elastic than ° C. The demand curve for Middle Fall is less price elastic than the 0 D. The demand curve for Middle Fall is more income elastic than the demand for West Fall 4 demand for West Fall the demand for West Fall

Explanation / Answer

Answer.) c.) The demand curve for Middle Fall is less price elastic than the demand for West Fall.

Price Elasticity = % change in quantity demanded / % change in price

Ealsticity in Middle Fall = {[(2-1)x100] / 1} ÷  {[(8-7)x100] / 8} = 8

Ealsticity in West Fall = {[(2-1)x100] / 1} ÷ {[(5.0-4.5)x100] / 5} = 10

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