If a 1% increase in the price of DVD players leads to a 3% reduction in its sales, we can conclude that:
A)the supply of DVD players is perfectly inelastic.
B)DVD players are inferior goods.
C)the demand for DVD players is relatively elastic.
D)the demand for DVD's is relatively inelastic.

Question

Quizplus · Accepted Answer

The fact that a 1% increase in price leads to a 3% reduction in sales indicates that the demand for DVD players is relatively elastic. This means that consumers are sensitive to changes in price and will decrease their demand significantly when prices rise. If the demand were relatively inelastic, a price increase would lead to only a small decrease in sales.

If a 1% Increase in the Price of DVD Players