Price elasticity depends on the magnitude and direction of the price change.If may differ for a price cut versus a price increase.When the price changes have little or no effect,there might exist a ________ for your product.
A) selective price
B) price indifference band
C) substitute product
D) promotional price
E) collective price

Question

Quizplus · Accepted Answer

A price indifference band refers to the range of prices within which consumers are relatively indifferent to price changes and the demand remains the same. If price changes have little or no effect on demand, it suggests that consumers view the product as having few close substitutes and may be within the price indifference band. Therefore, option B is the best choice. Option A (selective price) refers to charging different prices to different customers or for different products, which is not relevant here. Option C (substitute product) refers to a similar product that can replace the original product, which is not mentioned in the question. Option D (promotional price) refers to a temporary reduction in price to attract customers, which is not relevant here. Option E (collective price) is not a relevant term in economics.

Price Elasticity Depends on the Magnitude and Direction of the Price