Business people speak about price elasticity of demand without using the actual term.Which one of the following statements reflects elastic demand for a good?
A)"A price cut won't help me.It won't increase sales, and I'll just get less money for each unit."
B)"I don't think a price cut will make any difference to my bottom line.What I may gain from selling more I would lose on the lower price."
C)"My customers are real bargain hunters.Since I set my prices just a few cents below my competitors, customers have flocked to the store, and sales are booming."
D)"With the recent economic recovery, people have more income to spend and sales are booming, even at the previous prices."
E)none of the above

Question

Quizplus · Accepted Answer

Option C reflects elastic demand for a good as a slight decrease in price has led to a significant increase in sales. This implies that customers are sensitive to changes in price and a small decrease in price has led to a large increase in the quantity demanded.

Business People Speak About Price Elasticity of Demand Without Using