Ask Question
BusinessBusiness
11 July, 07:33

Fantastic Cuts Hair Salon knows that a 15% increase in the price of their haircuts will result in a 5% decrease in the number of haircuts sold. What is the elasticity of demand facing Fantastic Cuts? A. - 0.05 B. - 0.10 C. - 0.33 D. None of the above

+1
Answers (1)
  1. 11 July, 11:14
    0
    C. - 0.33

    Explanation:

    Elasticity is a microeconomic concept that aims to measure the sensitivity of demand in the face of price changes. To calculate the price elasticity of demand, a formula is used that divides the observed change in quantity (Q) by the change in price (P).

    Elasticity = ▲ Q / ▲ P

    We know that the price change was 15% = 0.15

    We know that the change in quantity was - 5% = - 0.05

    So:

    Elasticity = - 0.05 / 0.15 = - 0.33

    Plus: when the value of elasticity is less than 1, we say that demand is inelastic - little price sensitive. When elasticity is greater than 1, we say that demand is elastic (price sensitive).

    In this case, the demand for haircutting is inelastic.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Fantastic Cuts Hair Salon knows that a 15% increase in the price of their haircuts will result in a 5% decrease in the number of haircuts ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers
You Might be Interested in
Suppose that real domestic output in an economy is 300 units, the quantity of inputs is 50 and the price of each input is $9. the per-unit cost of production is: $0.67 $1.50 $33.33 $55.00
Answers (1)
What is a delivery gap? a. the difference between a firm's service standards and the actual service it provides b. the difference between the actual service provided to customers and the firm's promotion program services c.
Answers (1)
The income and expenses of a corporation for federal income tax purposes are referred to as what type of income? a. nontaxableb. accountingc. tax
Answers (1)
When valuing a stock using the constant-growth model, d1 represents the?
Answers (1)
Which of the following is not one the factors affecting supply A) input cost B) technology C) deregulation D) labor productivity
Answers (1)
New Questions in Business
Money is a productive asset. Its opportunity cost is: A) The time value of money. B) Valuation. C) Inflation. D) Replacement cost. E) Depreciation.
Answers (1)
What term refers to selling goods in a foreign market at a price that is far below the cost of production? A. profiteering B. screening C. offloading D. dumping
Answers (2)
John Pablo works in the accounting department of a multinational manufacturing company, His job includes updating account receivable based on sales orders and remittance advices.
Answers (1)
Exercise 14-04 On October 31, the stockholders' equity section of Cullumber Company consists of common stock $370,000 and retained earnings $904,000.
Answers (1)
Joe owned a small repair shop. Each day, he would check the mail to see if any of his customers mailed in a payment for the work he had done for them. Some days, he would receive a check or two.
Answers (1)
Home » Business » Fantastic Cuts Hair Salon knows that a 15% increase in the price of their haircuts will result in a 5% decrease in the number of haircuts sold. What is the elasticity of demand facing Fantastic Cuts? A. - 0.05 B. - 0.10 C. - 0.33 D.
Sign Up Forgot Password?