Suppose the demand for a Czech novel translated into English is perfectly inelas

Question

Suppose the demand for a Czech novel translated into English is perfectly inelastic. Assume the initial price of the translated novel is $25.00 and the quantity demanded is 391 copies per year. If the price of the translated novel increases by $3.00, then the quantity demanded will be( ) nothing copies per year. Next, suppose the demand for a mystery novel by Stephen King is infinitely elastic. In this example, assume the initial price of the novel is $30.00 and the quantity demanded is 98 thousand copies per year. If the price of the mystery novel increases by $2.00, then the quantity demanded will be( ) nothing copies per year.

Explanation / Answer

a) Perfectly inelastic is a situation when the demand doesn't change with a change in the price. It remains the same no matter how much the price increase or decrease. When the price increase by $3, the demand will be 391 copies.

b) infinitely elastic is a situation when the demand reduces to zero with a change in the price. Here, after an increase in the price of the novel the new demand will be zero per year.

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