Suppose Aiyanna's Pizzeria currently faces a linear demand curve and is charging a very high price per pizza and doing very little business. Aiyanna now decides to lower pizza prices by 5% per week for an indefinite period of time. We can expect that each successive week
A. demand will become less price elastic.
B. the elasticity of supply will increase.
C. price elasticity of demand will not change as price is lowered.
D. demand will become more price elastic.
Answer: A
You might also like to view...
Given that the value of individual production of Carol and Tessie is zero, while their combined production is positive, we may conclude that:
a. any subset of the grand coalition can credibly threaten to block the coalition. b. the coalition is not individually rational. c. the core is empty. d. any allocation of payoffs from the coalition will lie within the core.
A rent control law, where tenants pay below-market rents, is a market restriction that may induce a decrease in the supply of rented apartments
a. True b. False Indicate whether the statement is true or false