Question

Suppose Aiyanna's Pizzeria currently faces a linear demand curve and is charging a very high price per pizza and doing very little business. Aiyanna now decides to lower pizza prices by 5 percent per week for an indefinite period of time. We can expect that each successive week.

Answer 1

Answer:

Options Include:

A. demand will become more price elastic.

B. price elasticity of demand will not change as price is lowered.

C. demand will become less price elastic.  is Correct

D. the elasticity of supply will increase.

Explanation:

Typically as a broadly accurate guide, the product is called elastic if the quantity of a good demanded or purchased increases more than the change in price.

(Price increases by + 5%, but demand decreases by -10%). When the shift in the purchased quantity is the same as the price change (say, 10 per cent/10 per cent= 1), the product is said to have price elasticity unit (or unitary).

Eventually, when the purchased quantity changes less than the price (say,-5 per cent demanded for a price change of+ 10 per cent), then the product is called inelastic.