the price of hot dogs changes by 22% and the quantity of hot dogs demanded changes by 25%. This indicates that demand for hot dogs is
a.elastic b.inelastic c.unit elastic d.perfectly elastic
To determine whether the demand for hot dogs is elastic, inelastic, unit elastic, or perfectly elastic, we need to consider the price elasticity of demand. Price elasticity of demand measures the responsiveness of the quantity demanded to changes in price.
The formula for price elasticity of demand is:
Elasticity = Percentage change in quantity demanded / Percentage change in price
In this case, the price of hot dogs changes by 22% and the quantity of hot dogs demanded changes by 25%.
To calculate the percentage change in quantity demanded, we use the formula:
Percentage change in quantity demanded = (New quantity demanded - Original quantity demanded) / Original quantity demanded * 100%
Percentage change in quantity demanded = (25 - 100) / 100 * 100% = -75%
To calculate the percentage change in price, we use the formula:
Percentage change in price = (New price - Original price) / Original price * 100%
Since we don't have specific values for the original and new prices, we can't calculate the exact percentage change in price.
Now, let's substitute the values into the price elasticity of demand formula:
Elasticity = (-75%) / Percentage change in price
Without knowing the percentage change in price, we can't determine the exact elasticity of demand.
However, we can make a general conclusion based on the magnitudes of the percentage change in quantity demanded and percentage change in price. If the magnitude of the percentage change in quantity demanded is greater than the magnitude of the percentage change in price, the demand is considered elastic. If the magnitude of the percentage change in quantity demanded is smaller than the magnitude of the percentage change in price, the demand is considered inelastic. If the magnitudes are equal, the demand is considered unit elastic. If the percentage change in quantity demanded is infinite, the demand is considered perfectly elastic.
Since we don't have the exact values for the percentage change in price and quantity demanded, we cannot determine the exact elasticity. Therefore, the correct choice cannot be determined.