Question

Suppose that Juan Carlos is filling out a survey that he received in the mail. The survey would do if the price of his favorite toothpaste increased. Juan Carlos reports that nee thpaste increased. Juan Carlos reports that he would switch to a different brand. The survey asks what he would do if the price of all toothpastes increased o if the price of all toothpastes increased. Juan Carlos reports that he must use toothpaste, so he would have to adiust his spending elsewhere. These examps illustrate the importance of:_________

a. the definition of a market in determining the price elasticity of demand.
b. a necessity versus a luxury in determining the price elasticity of demand.
c. changes in total revenue in determining the price elasticity of demand.
d. the time horizon in determining the price elasticity of demand.

Answer 1

A. The definition of a market in determining the price elasticity of demand.

Step-by-step explanation:

Price elasticity of demand is the height of responsiveness of demand or purchase to changes in price. It shows how consumers or buyers would react to the demand for a product when the price of their favourite brand increases.

Reaction of consumers in the market place is one of the determinants of price elasticity of demand. It tells how buyers will switch to different brand of products if the price of their favourite brand increases. It also shows how consumers will adjust their spending abilities if the price of all the brands are increased at the same time.

Alternatively, consumers would demand for the brand that falls within the limit of their spending.