Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Calculate the percentage change in quantity demanded
B
Assess the overall impact on total revenue
C
Determine the percentage change in price
D
Classify demand as elastic or inelastic based on the findings
Understanding the Answer
Let's break down why this is correct
Answer
Demand elasticity measures how much the quantity demanded of a good changes when its price changes. To analyze it, first, you need to identify the good you’re studying and gather data about its price and quantity sold. Next, you calculate the percentage change in quantity demanded and the percentage change in price to find the elasticity coefficient. For example, if the price of a movie ticket increases by 10% and the quantity demanded decreases by 20%, the elasticity would be -2, indicating that demand is elastic. Finally, interpret the results to understand how sensitive consumers are to price changes, which can help businesses make better pricing decisions.
Detailed Explanation
First, you need to find out how much the quantity demanded changes when the price changes. Other options are incorrect because Some might think you should look at total revenue first; Determining the price change is important, but it comes after you see how quantity changes.
Key Concepts
Demand Elasticity
Total Revenue Impact
Price Sensitivity
Topic
Understanding Demand Elasticity
Difficulty
medium level question
Cognitive Level
understand
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