Assume that the demand for refrigerators is price elastic.Which of the following

Question

Assume that the demand for refrigerators is price elastic.Which of the following statements are true? Explain why eachstatemennt you chose is true.

A.) A change in the price of refrigerators affects the numberof refrigerators purchased.
B.) Qty demanded is very responsive to changes in the price ofrefrigerators.
C) Revenues from refrigerators will decrease if morerefrigerators are sold.
D.) The percentage change in the quanity demanded ofrefrigerators is more than the percentage change in price.

Explanation / Answer

Elastic demand indicates price sensitivity and buyer responsiveness; apercentage change in price means a large percentage change inquantity demanded. That is, more buyers are willing to purchase the good or service ifthe price is lowered, and less buyers are willing to purchase thegood or service if the price is raised. (E > 1; Total revenueand price move in opposite directions.) A and B are true, since buyers are price sensitive. D is true, since E >1.

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