If demand is price inelastic, then a. buyers respond substantially to a change in price, but the response is very slow. b. the demand curve is very flat. c. buyers do not respond much to a change in price. d. buyers do not alter their quantities demanded much in response to advertising, fads, or general changes in tastes.

Question

Business

Sloane Bennett

Yesterday, 21:46

If demand is price inelastic, then a. buyers respond substantially to a change in price, but the response is very slow. b. the demand curve is very flat. c. buyers do not respond much to a change in price. d. buyers do not alter their quantities demanded much in response to advertising, fads, or general changes in tastes.

+1

Answers (1)

Know the Answer?

Kolten Caldwell · Answer 1

C.

Explanation:

Price elasticity of demand (PED) measures the responsiveness of demand after a change in the good's own price.

Demand is relatively inelastic if the quantity demanded changes less than proportionally to the change in price.

In this instance, total revenue increases following an increase in price.

Inelastic product is highly unresponsive to changes in price.

If the co-efficient of price elasticity of demand <1, then demand is said to be price inelastic i. e. unresponsive to a change in price Price.

Following a change in price, the total revenue earned by the producing firm will depend on the PED for its product.

If the coefficient of PED is <1, a rise in market price (e. g. from P1 to P2) will lead to an increase in total revenue for the seller of the product.