If Pizza Hut decreases its price for a large pizza by 25% and this leads to a 75% increase in sales, we can conclude that demand is relatively elastic with regard to price over that range.

Question

Quizplus · Accepted Answer

A decrease in price of 25% leads to a significant increase in sales by 75%. This suggests that customers are very responsive to changes in price, indicating that demand is relatively elastic. If demand were inelastic, customers would not respond as strongly to the price decrease, and sales would not increase by such a large amount.

If Pizza Hut Decreases Its Price for a Large Pizza