Question

Suppose that you are selling comic books door to door. You purchased all your comic books up front so your costs are currently all sunk. You are currently selling comic books for $3.50 apiece and you sell 25 comic books per day. You know that the elasticity of demand for comic books at your current price is -.6. Is your price too high or too low

Answer 1

Answer: The price can be said to be too low.

Step-by-step explanation:

Since the elasticity of demand for comic books at the current price is -0.6, then we can say that the price is too low as the demand is inelastic.

An elasticity of demand that is less than one shows that a product has an inelastic demand. This simply means that the change in price would bring about a very little change to the quantity of the comic books that'll be bought.