Asked by Marisa Tavarez on May 02, 2024
Verified
If the price of apples rises, when is the price elasticity of demand likely to be the highest?
A) Immediately after the price increase
B) One month after the price increase
C) Three months after the price increase
D) One year after the price increase
Price Elasticity
A measure of how much the quantity demanded of a good responds to a change in the price of that good, with higher elasticity indicating greater responsiveness.
Demand
The quantity of a good or service that consumers are willing and able to purchase at various prices over a given period of time.
- Understand the concept of price elasticity of demand and its calculation using different methods.
Verified Answer
UW
Unique WalkerMay 08, 2024
Final Answer :
D
Explanation :
The price elasticity of demand is likely to be the highest one year after the price increase because consumers have more time to find substitutes or adjust their consumption habits in response to the price change. Over a longer period, the demand tends to become more elastic as people explore and adapt to alternatives.
Learning Objectives
- Understand the concept of price elasticity of demand and its calculation using different methods.