Assume that the market for pencils is in equilibrium and that demand is very price elastic. The popularity of digital tablets and electronic pens increases and demand for pencils declines. The equilibrium change in quantity demanded is:
A) 0 (zero).
B) relatively small.
C) proportional to the shift in demand.
D) relatively large.
E) infinite.

Question

Quizplus · Accepted Answer

Since demand for pencils has declined due to the popularity of digital alternatives, the equilibrium change in quantity demanded is expected to be relatively large. This is because the high price elasticity of demand for pencils means that even small changes in demand can cause relatively large changes in quantity demanded.

Assume That the Market for Pencils Is in Equilibrium and That