Assume Sarah is a CPA who earns $85,000 a year and her favorite entertainment magazine costs her $15 a year.For her,the price elasticity of demand for the magazine is likely to be
A) elastic.
B) inelastic.
C) perfectly elastic.
D) none of the above

Question

Quizplus · Accepted Answer

Sarah's income is relatively high compared to the cost of the magazine, so the percentage change in quantity demanded is likely to be less than the percentage change in the price of the magazine. Therefore, the price elasticity of demand for the magazine is likely to be inelastic.

Assume Sarah Is a CPA Who Earns $85,000 a Year