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The question in the image is asking about how the quantity demanded of data will likely respond if a new phone service provider enters the market, causing Connecting U to reduce the price of data further, by an additional 22.2%. The question suggests predicting how the quantity demanded will react to this price decrease.

To answer this, we need to apply the concept of the price elasticity of demand (PED), which measures how much the quantity demanded of a good responds to a change in its price.

If the price elasticity of demand is elastic (i.e., the quantity demanded responds significantly to a price change), the quantity demanded would increase significantly, potentially more than 40%.

If the demand is inelastic, the quantity demanded would increase but by less than the percentage decrease in price, meaning less than 40%.

In this case, the correct choice likely aligns with the understanding that the increase will be substantial, but the exact percentage increase would depend on how elastic the demand for data is in this context. Based on typical demand behavior for data, the most reasonable answer appears to be **"My quantity demanded will increase, but by less than 40 percent."**

Would you like a further breakdown on elasticity of demand? 

Here are 5 questions related to this:
1. What factors affect the elasticity of demand for data services?
2. How does a 22.2% decrease in price affect quantity demanded if the demand is perfectly elastic?
3. What is the difference between elastic and inelastic demand?
4. How can firms use knowledge of price elasticity when setting prices?
5. What happens to a company's total revenue if they decrease prices and demand is inelastic?

**Tip:** Elasticity is a critical tool in economics for predicting consumer behavior when prices change, especially for services like data that can have varying elasticity depending on the market!

Joe, if another phone service provider enters the market and forces Connecting U to drop the price of a gigabyte down even further than $16—let's say they drop it by an additional 22.2%—what will probably happen to your quantity demanded of data?

This problem covers how a 22.2% decrease in price from a phone service provider affects the quantity demanded of data. It explores the concept of price elasticity of demand, with a step-by-step solution using the PED formula. Suitable for students in Grades 10-12.

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