Question

When the price of chai tea lattés is $5, maxine buys 20 per month. when the price is $4, she buys 30 per month. maxine's demand for chai tea lattés is
a. inelastic, and her demand curve would be relatively steep.


b. elastic, and her demand curve would be relatively flat.


c. elastic, and her demand curve would be relatively steep.


d. inelastic, and her demand curve would be relatively flat?

Answer 1

Answer:

b. elastic, and her demand curve would be relatively flat.

Explanation:

he elasticity of demand is a term that describes the degree of responsiveness of demand due to changes in price. Elastic demand is when demand for a good or service is sensitive to changes in price. A small change in price results in a significant change in the quantity demanded.

Maxine has elastic demand for chai tea. A small decrease in the price of $1 ( 20 percent ) causes the demand to rise by 50 percent. The demand curve for an elastic product is relatively horizontal. It may be referred to as flat. The price is indicated on the Y-axis and the quantity of the X-axis. A small movement of the Y-axis big reaction on the X-axis tilting the demand curve to a horizontal shape.