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20 August, 21:45

Jim saw a decrease in the quantity demanded for his firm's product from 8000 to 6000 units a week when he raised the price of the product from $200 to $250. Based on this information, the demand for Jim's product is a) Elastic b) Unitary elastic c) Inelastic d) Hard to determine

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  1. 21 August, 00:48
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    The answer is A.

    Explanation:

    If a a product is price elastic that means it is sensitive to price. If there is an increase in price, the quantity demanded of that product will drop and if there is a decrease in price, the quantity demanded of that product will rise. Price elasticity has a value greater than one.

    Because the price rose from $200 to $250, quantity demanded fell from 8000 units to 6,000 units.

    If it were to be inelastic, the quantity demanded will not change or will change with very little percentage.
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