Asked by Victoria Salazar on Sep 24, 2024
Verified
An owner of a local salon realized that by decreasing the prices that she charges for haircuts,her revenue has increased.This implies that
A) The demand for her haircuts is elastic
B) The demand for her haircuts is inelastic
C) The demand for her haircuts is unitary elastic
D) The demand for her haircuts is perfectly inelastic
Decreasing Prices
A situation where the cost of goods or services is becoming lower over time.
Revenue
The total amount of money received by a company for goods sold or services provided during a specific period.
- Investigate the impact of pricing fluctuations on revenue, taking into account demand elasticity.
Verified Answer
SS
Sukhdeep Sidhu4 days ago
Final Answer :
A
Explanation :
When the owner decreased the prices of haircuts and witnessed an increase in revenue, it suggests that the percentage change in quantity demanded is relatively more than the percentage change in price, indicating an elastic demand. In other words, customers are sensitive to a change in prices and increased demand enough to offset the reduction in price, leading to the revenue boost.
Learning Objectives
- Investigate the impact of pricing fluctuations on revenue, taking into account demand elasticity.
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