Question

Suppose the price for sneakers increases by 40%, demand decreases by 10%. For sneakers, the price elasticity of demand is:"

-elastic
-inelastic
-neither elastic nor inelastic
-both elastic and inelastic
-this cannot be determined from the information provided

Answer 1

The price elasticity of demand for sneakers is inelastic.

Step-by-step explanation:

The price elasticity of demand for sneakers can be determined based on the information provided. To calculate price elasticity of demand, we divide the percentage change in quantity demanded by the percentage change in price. In this case, the price increased by 40% and the demand decreased by 10%. The price elasticity of demand can be calculated as:

Elasticity = (Percentage Change in Quantity Demanded) / (Percentage Change in Price)

Elasticity = -10% / 40% = -0.25

Since the elasticity value is less than 1 in absolute value, the demand for sneakers is inelastic.