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larisa [96]
2 years ago
15

Freeze Ice Cream Shop sells its specialty shakes for $3.50 each. In the summer months, the shop typically sells 200 shakes a day

. The shop's owner thinks if he reduces the price to $3 he will increase sales significantly. However, when he reduced the price, he only sold about 15 more shakes per day. This represents demand that is :___________
Business
1 answer:
mamaluj [8]2 years ago
5 0

As a result of the demand increasing only slightly compared to the reduction in price, the demand must be <u>inelastic</u>.

<h3>Why is the demand inelastic?</h3><h3 />

The demand is considered to be inelastic if the price elasticity is less than 1.

The price elasticity is:

= (%Change in quantity/% Change in price)

Solving gives:

= 15 / 200 ÷ 0.50 / 3.50

= -0.525

In conclusion, the demand for the shakes is inelastic.

Find out more on inelastic demand at brainly.com/question/1899986.

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