Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
The product has elastic demand
B
The product has inelastic demand
C
The product has unitary elasticity
D
The product's demand is perfectly inelastic
Understanding the Answer
Let's break down why this is correct
Answer
When the price of a product decreases and many more people want to buy it, this shows that the demand for that product is elastic. Elastic demand means that consumers are very responsive to changes in price; a small drop in price leads to a big increase in the amount they want to buy. For example, if a popular snack goes from $2 to $1 and suddenly a lot more people are buying it, this indicates that they really like the snack at that lower price. This relationship is important because it suggests that if the company wants to increase its sales revenue, lowering the price can be a good strategy. Overall, elastic demand means that price changes have a strong effect on how much people want to buy.
Detailed Explanation
When the price goes down and people buy a lot more, it shows that they really want the product. Other options are incorrect because Some might think inelastic means people still buy it no matter what; Unitary elasticity means the demand changes exactly the same as the price.
Key Concepts
price elasticity of demand
Topic
Price Elasticity and Revenue
Difficulty
easy level question
Cognitive Level
understand
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