A famous distillery sold 50,000 bottles of their bourbon at the price of $380/bottle back in 2019. Because of the sudden effect of the Covid-19 pandemic in 2020, they’ve decreased their price to $280/bottle. This is to make more sales rather than to keep many of their bottles in their inventory. As a result, they sold 87,000 bottles (assume that demand is linear).
Which of the following statements is true?
The point price elasticity at a price of $280 is approximately 2.81.
The point price elasticity at a price of $380 is approximately 3.81.
The point price elasticity at a price of $280 is approximately 1.19.
A 1% decrease in the price of a bottle of bourbon leads to a less than 1% increase in quantity demanded.
The elasticity of demand is elastic at all points along the demand curve.