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Money Supply and Inflation

Suppose the d...

Question

Suppose the demand for meals at a medium-priced restaurant is elastic. If the management of the restaurant is considering raising prices, it can expect a relatively ________.

A

large fall in quantity demanded

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B

large rise in quantity demanded

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C

small fall in quantity demanded

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D

small rise in quantity demanded

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Solution

The correct option is A large fall in quantity demanded
Suppose the demand for meals at a medium-priced restaurant is elastic. If the management of the restaurant is considering rasiing prices, it can expect a relatively large fall in quantity demanded.
Hence, the correct option is A.

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