-Figure 5-1 shows the prices of two services offered by Earl's Barber Shop and the resulting quantities demanded by customers.Suppose that the current price for a haircut is $20 and the current price for a manicure is $12,and Earl has a sale of $4 off the price of either a haircut or a manicure.In this example,
A)haircuts have the smaller absolute change in quantity demanded and the more elastic demand
B)Earl can earn more revenue from manicures at the lower price
C)Earl should decrease the number of spaces in his shop allocated to haircuts
D)the demand for haircuts is unitary elastic
E)the demand for haircuts is inelastic

Question

-Figure 5-1 shows the prices of two services offered by Earl's Barber Shop and the resulting quantities demanded by customers.Suppose that the current price for a haircut is $20 and the current price for a manicure is $12,and Earl has a sale of $4 off the price of either a haircut or a manicure.In this example,
A)haircuts have the smaller absolute change in quantity demanded and the more elastic demand 
B)Earl can earn more revenue from manicures at the lower price 
C)Earl should decrease the number of spaces in his shop allocated to haircuts 
D)the demand for haircuts is unitary elastic 
E)the demand for haircuts is inelastic

Quizplus · Accepted Answer

Haircuts have a smaller absolute change in quantity demanded (from 100 to 80) than manicures (from 120 to 100), and therefore have the more elastic demand.

-Figure 5-1 Shows the Prices of Two Services Offered by Earl's