Question

The demand for emeralds tends to be very elastic. This is because emeralds are more of a _____________. It also means that a 33% off sale on emerald necklaces would bring about _________________ in the total revenue of the emerald necklace supplier.A) luxury item, a decreaseB) necessity, an increaseC) luxury item, an increaseD) luxury item, no changeE) necessity, no change

Answer 1

Answer:

C) luxury item, an increase

Explanation:

Price elasticity of demand measures the responsiveness of quantity demanded to changes in price.

An elastic demand means a small change in price leads to a greater change in quantity demanded.

A luxury good is a good that isn't a necessity. They are usually bought as a status symbol.

Luxury goods usually have elastic demands.

Emeralds are luxury goods and if there's a fall in price of emeralds the quantity demanded of emeralds would rise.

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