Explain using price elasticity of demand why air conditioning manufacturers would actually have sales in the middle of the summer when customers have the most acute need? Explain this apparent paradox
What will be an ideal response?
During the winter months customers can postpone their decision to buy an air conditioner. So it would seem that manufacturers would not offer sales in the summer when customers can least afford to postpone their decision. But the reason that they do is that during the summer there is increased competition and manufacturers realize that you have choices. These choices lead to an increase in the price elasticity of demand.
You might also like to view...
When a tariff is applied to a good exported by a foreign monopoly (with no home producer), the increase in the equilibrium price is ________ the tariff applied.
a. more than b. less than c. the same as d. more than twice as much as
Demand is inelastic if
A) a large change in quantity demanded results in a small change in price. B) the quantity demanded is very responsive to changes in price. C) the price elasticity of demand is less than 1. D) the price elasticity of demand is greater than 1.