Question

A business decreases the price of their product by 10%, as a result, consumer demand for the product has also increased by 10%. Which term does the scenario best describe?

a. demand elasticity

b. inelastic demand

c. elastic demand

d. unit elastic demand

Answer 1

The answer is A.

The demand elasticity is often described as the reaction of the supply and demand in the price change. There are many factors that affect the elasticity of a product. If products are essential, even if a price hike would occur, people would still be buying it. If the prices go down, it would also increase the demand.

Answer 2

The answer to the question is letter A. The term described in the above example or scenario is demand elasticity. The term is a measure of the relavance between a change in the quantity of a particular good and a change of the price of the good.