The following question are based on the following information. Five adolescents are willing to buy the latest iPhone game at these prices:

-A $1 price increase would reduce the quantity demanded in this market by
A) zero.
B) one.
C) two.
D) three.
E) four.

Question

The following question are based on the following information. Five adolescents are willing to buy the latest iPhone game at these prices:
 
-A $1 price increase would reduce the quantity demanded in this market by
A) zero. 
B) one. 
C) two. 
D) three. 
E) four.

Quizplus · Accepted Answer

The law of demand states that as the price of a good increases, the quantity demanded decreases. However, the question does not provide any information about the elasticity of demand for the iPhone game. Therefore, we cannot determine exactly how much the quantity demanded will decrease with a price increase. We can only make an educated guess based on general principles. Since we are dealing with a luxury item that is not a necessity, we can assume that the demand is relatively elastic. This means that a small increase in price will lead to a relatively large decrease in quantity demanded. Out of the answer choices provided, option B (one) seems to be the most reasonable estimate for how much quantity demanded would decrease with a $1 price increase.

The Following Question Are Based on the Following Information