A luxury handbag brand raises prices by 10% but experiences only a 2% drop in volume. Demand is:

Question

BlackTom AI · Accepted Answer

The question asks about the elasticity of demand given a price increase of 10% and a volume drop of 2%. We will evaluate each answer choice in turn.
Option 1: 'Growing' — This term would imply that demand increases as price rises, which is inconsistent with the observed data (price up, volume down). The observed movement does not support growth in demand, so this option is incorrect.
Option 2: 'Fixed' — A fixed demand would mean no change in quantity demanded when price changes; however, the scenario shows a 2% decrease in volume after a 10% price increase, so demand is not fixed. This option mischaracterizes the responsiveness of quantity to price.
Option 3: 'Inelastic' — This option aligns with the idea that quantity demanded changes only slightly when price changes. To quantify, elasticity of demand is the percentage change in quantity divided by the percentage change in price: |ΔQ/Q| / |ΔP/P| = 2% / 10% = 0.2. Since 0.2 is less than 1 in absolute value, demand is considered inelastic. This matches the observed small drop in quantity despite a substantial price increase.
Option 4: 'Elastic' — Elastic demand would require a relatively large change in quantity with a price change; with only a 2% drop in volume after a 10% price rise, the responsiveness is not large enough to be elastic. Therefore this option is incorrect.
Option 5: 'Declining' — While the quantity did decline (2%), the term 'declining' describes the direction of quantity only and does not address the price sensitivity. Elasticity focuses on the magnitude of response, so calling it simply 'Declining' ignores the key concept of price responsiveness and is not the best descriptor in this context.
Overall, the data show a small quantity response to a price increase, yielding a low elasticity value (0.2 in absolute terms), which corresponds to the inelastic characterization. The option that matches this interpretation is the one labeled 'Inelastic'.

FA25-BL-BUS-M370-11927 Marketing Final Exam- Requires Respondus LockDown Browser

A luxury handbag brand raises prices by 10% but experiences only a 2% drop in volume. Demand is:

查看解析

登录即可查看完整答案

类似问题

When there are many substitute products available, the price elasticity of demand for a given product will likely be Blank ______.

When a 10 percent decrease in price results in a less than 10 percent increase in quantity sold, the demand for the product or service is described as Blank ______.

If the absolute value of the price elasticity of demand for good X is 0.5, then a 10% decrease in the price of good X will result in which of the following?

The own-price elasticity of Starbucks coffee is -0.8, meaning __.

There are many different factors that impact the price elasticity of demand. More specifically, the proportion of budget and the income effect refer to how price as a portion of income influences price elasticity. Which of the following is true

Rock melon has a price of elasticity of demand of (-)2.95, it can be concluded that the demand for rock melons is ___________.

The discovery of a new hybrid wheat would tend to increase the supply of wheat. Under what conditions would wheat farmers realise an increase in revenue?

Shoes are priced at $75 per pair. A vendor sells 20 pairs per day. The vendor explores selling at $100 per pair. At that price, the vendor sells 15 pairs over the day. What is the elasticity of shoe sales to price.

更多留学生实用工具

考试浏览器助手

风格化写作助手

论文查重助手

文献引用助手

课堂转译助手

课堂笔记助手

Quiz搜索助手

学校历年真题

智能刷题助手

智能匹配练习

希望你的学习变得更简单