Asked by Jiajia Jiang on Jul 29, 2024
Verified
Suppose a firm in each of the two markets listed below were to increase its price by 25 percent. In which pair would the firm in the first market listed experience a dramatic decline in sales, but the firm in the second market listed might not?
A) Restaurants and smartphones
B) Electricity and natural gas
C) Rice and satellite radio
D) Rice and soybeans
Dramatic Decline
Dramatic decline refers to a rapid and significant decrease in value, quantity, or quality of an economic indicator, asset, or other measurable factors.
Price Increase
A situation where the cost of goods and services rises over a period.
- Explain the idea of elasticity within supply curves across various temporal spans in competitive market environments.
Verified Answer
ZK
Zybrea KnightAug 03, 2024
Final Answer :
C
Explanation :
Rice is a basic necessity with many substitutes, so a price increase would lead to a significant drop in sales as consumers switch to alternatives. Satellite radio, being a luxury or non-essential service, might not see as dramatic a decline since its demand is less sensitive to price changes.
Learning Objectives
- Explain the idea of elasticity within supply curves across various temporal spans in competitive market environments.
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