Case-Based Critical Thinking Questions
Case 10-1
You have been having some difficulty in your economics class this semester,so you have requested support from a tutor.One topic that is giving you trouble at the moment is the price elasticity of demand.
-Consumers have to choose between two products that are exactly equal in all respects,and raising the price of one causes a huge decrease in demand.This is an example of what kind of elasticity,according to your tutor?
A) Relatively inelastic
B) Perfectly inelastic
C) Relatively elastic
D) Perfectly elastic

Question

Quizplus · Accepted Answer

This scenario is an example of perfect elasticity, as the demand for the two products is directly and infinitely proportional to the difference in price. Any increase in price of one product will result in a complete shift in demand to the other product.