PNG's Managers Estimate That a 50% Increase in Price Would

Multiple Choice

PNG's managers estimate that a 50% increase in price would cause an 80% reduction in the quantity of product sold. Total fixed costs for the product are $5,000 and total variable costs are $4,000, based on production of 400 units. The following values may be useful: $\begin{array} { l l } \ln ( 0.2 ) = - 1.609 & \ln ( 1.5 ) = 0.405 \\\ln ( 0.5 ) = - 0.693 & \ln ( 4,000 ) = 8.294 \\\ln ( 0.8 ) = - 0.223 & \ln ( 5,000 ) = 8.517\end{array}$ PNG's price elasticity of demand is:

A) -0.252
B) +0.322
C) -3.973
D) +3.108