A
firm selling ready meals discovers that the price elasticity of its product is
-2.5 (meaning that demand decreases as the product's price increases) and the income elasticity of its product is +1.5 (meaning that demand increases as consumer income increases). Which of the following statements are true?

Question

Answer

A
10% rise in consumer income will lead to a 1.5% rise in sales of its ready
meals.

Answer

A
6% rise in consumer income will lead to a 9% rise in sales of its ready
meals.

Answer

A
4% fall in the price of its product will lead to a 10% fall in sales of its
ready meals.

Answer

A
5% rise in the price of its product will lead to a 12.5% fall in sales of its
ready meals.

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A firm selling ready meals discovers that the price elasticity of its product is...

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