Question

If demand is price inelastic, then a. buyers respond substantially to a change in price, but the response is very slow. b. the demand curve is very flat. c. buyers do not respond much to a change in price. d. buyers do not alter their quantities demanded much in response to advertising, fads, or general changes in tastes.

Answer 1

Answer:

C.

Explanation:

Price elasticity of demand (PED) measures the responsiveness of demand after a change in the good’s own price.

Demand is relatively inelastic if the quantity demanded changes less than proportionally to the change in price .

In this instance, total revenue increases following an increase in price.

Inelastic product is highly unresponsive to changes in price.

If the co-efficient of price elasticity of demand <1, then demand is said to be price inelastic i.e. unresponsive to a change in price Price.

Following a change in price, the total revenue earned by the producing firm will depend on the PED for its product.

If the coefficient of PED is <1, a rise in market price (e.g. from P1 to P2) will lead to an increase in total revenue for the seller of the product.