Asked by Haily Cole-Randall on Jun 26, 2024
Verified
If the price of hand calculators falls from $10 to $9 and, as a result, the quantity demanded increases from 100 to 125, then
A) demand is price elastic.
B) demand is price inelastic.
C) demand is unit elastic with respect to price.
D) not enough information is given to make a statement about elasticity.
Hand Calculators
Portable electronic devices used for performing calculations, ranging from basic arithmetic to complex mathematical operations.
Price Elastic
Refers to the responsiveness of the quantity supplied or demanded of a good or service to a change in its price, often interchangeable with Price Elasticity of Demand or Supply depending on context.
Quantity Demanded
The total amount of a good or service that consumers are willing and able to purchase at a given price level in a given market at a specific time period.
- Identify the distinctions between elastic, inelastic, and unit-elastic demand.
Verified Answer
NN
Ntombi NtuliJun 30, 2024
Final Answer :
A
Explanation :
The price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. Here, the quantity demanded increases by 25% ([125-100]/100), and the price decreases by 10% ([9-10]/10). Since the percentage change in quantity demanded is greater than the percentage change in price, demand is price elastic.
Learning Objectives
- Identify the distinctions between elastic, inelastic, and unit-elastic demand.