Question

In July, Harry's shoes sold 8 pairs of purple crocs for $75 each. On the first day of August, he lowered the price of purple crocs to $50 each and sold 27 pairs during the month. Does this demonstrate Elastic Demand or Inelastic Demand? ​

Answer 1

Answer:

Elastic Demand

Explanation:

The term elastic means stretchy or stretching. Elastic demand implies a demand that is changing or moving.

Elastic demand is the term used to describe the demand for a good that changes due to an increase or decrease in prices. A product or service whose demand changes significantly in response to a small change in price is said to have elastic demand.

The scenario described in this case is that of elastic demand. The demand for purple crocs rose from 8 in July to  27 in august. An increase of 19 units, which represents an increase of 237 percent. The increase in demand was a result of a decrease in price from $75 to $50.  The price changes by $25, which is a decline of 33 percent. A drop in price by 33 percent results in a rise in demand by 237 percent is an illustration of elastic demand.