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Question
A value of the absolute price elasticity of demand equal to 2.5 indicates that
A) a 5% decrease in price leads to a 2% increase in quantity demanded.
B) a 2% decrease in price leads to a 25% increase in quantity demanded.
C) a 1% decrease in price leads to a 2.5% increase in quantity demanded.
D) a 0.25% decrease in price leads to a 1% increase in quantity.
Answer
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