Questions 23 through 25 are related.

23. The article "Safeway Shifts Tactics in Grocery Price War" reads: "Even after its discounts, its prices are still higher. Safeway's prices are 10.7% higher than those of Kroger Co.". Kroger is a major Safeway competitor that cut its prices more than Safeway. The article also includes the following statement: "Sales or revenue at Safeway stores open at least a year [generally referred to as "same store sales"] declined approximately 3% to $9.5 billion for the fiscal third quarter". If Safeway did not reduce its prices along with its competitors, then:

1. The demand curve for Safeway products shifted in or down or to the left.
2. The demand curve for Safeway products shifted out or up or the right.
3. Safeway operates in the "inelastic" range of the demand curve where the Price Elasticity of Demand is less than one.
4. Safeway must face a perfectly elastic Demand Curve.
5. Safeway must face a perfectly inelastic Demand Curve.

24. Safeway did not change its prices while its same store revenue declined from $9.785 billion in the second quarter to $9.5 billion in the third quarter. Assuming no new stores were opened or no stores were closed during the quarter, how much did Safeway's "volume" or "quantity" change in the quarter? Recall that Sales or Revenue equals Price x Quantity.

1. -2.91%
2. -4.37%
3. -7.70%
4. -12.30%
5. -13.70%

25. With the information given in question 23 and the answer from question 24, what is the "Arc" Cross Price Elasticity of Demand for Safeway [not using the midpoint method because the answers are very close whichever method is used]?

a. 0.27

b. 0.41

c. 1.15

d. +0.27

e. +0.41