Given that the own-price elasticity of demand for a brand of shoes is -2,the demand for this brand of shoes is
A)unitary elastic
B)indeterminate.
C)elastic.
D)inelastic.

Question

​Given that the own-price elasticity of demand for a brand of shoes is -2,the demand for this brand of shoes is
A)​unitary elastic
B)indeterminate.
C)elastic.
D)​inelastic.

Quizplus · Accepted Answer

The negative sign of the own-price elasticity value indicates an inverse relationship between the price and the quantity demanded of the shoes. The magnitude of the elasticity value (-2) implies that a 1% increase in the price of the shoes will result in a 2% decrease in the quantity demanded of the shoes. Since the elasticity value is greater than 1 (in absolute terms), the demand for the shoes is considered elastic. This means that consumers are highly responsive to changes in price and a price increase will lead to a relatively larger decrease in the quantity demanded.

​Given That the Own-Price Elasticity of Demand for a Brand

Given That the Own-Price Elasticity of Demand for a Brand