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1 February, 05:56

With the increased usage of cell phone services, what has happened to the price elasticity of demand for land-line telephone services?

(A) It has become more income elastic.

(B) It has become more price inelastic.

(C) It has become more price elastic.

(D) The absolute value of the price elasticity coefficient has probably gone down.

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  1. 1 February, 09:29
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    The correct answer is c) "It has become more price elastic"

    Explanation:

    With the increased usage of cell phone services, the demand for land-line telephone services decreased.

    If the demand won't change, this is inelastic. If the demand changes, it is elastic.

    example:

    If the price of the cellphones increses, I would use more the land line telephone. Elastic

    if the price of cellphones decreased, I won't use the land line telephone (actually ocurring) Elastic

    if the price of salt decreases, I will consume the same amount per month and I wouldn't need more product. Inelastic
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