Dosta Mattress Company manufactures and sells mattresses to retailers that then put their own store brand names on the product.At a price of $1,000,it sold 100 mattresses.It dropped its price to $600 and sold 175 mattresses.Regarding elasticity,what is demand for the mattresses?
A) unitary
B) inelastic
C) asymmetrical
D) elastic

Question

Quizplus · Accepted Answer

The elasticity of demand can be determined by the percentage change in quantity demanded with respect to the percentage change in price. In this case, the percentage change in price is 40% ($1000-$600/$1000 x 100%). The percentage change in quantity demanded is 75% ((175-100)/100 x100%). Since the percentage change in quantity demanded is greater than the percentage change in price, demand is elastic. This means that a 40% decrease in price results in a 75% increase in quantity demanded, indicating that consumers are responsive to price changes.

Dosta Mattress Company Manufactures and Sells Mattresses to Retailers That