Tina and Brian work for the same recording company.Tina claims they would be better off by raising the price of their CDs,while Brian claims they would be better off by lowering the price.Choose the correct statement.
A)Tina thinks the demand for CDs has price elasticity of demand equal to zero,and Brian thinks price elasticity of demand equals 1.
B)Tina thinks the demand for CDs has price elasticity of demand equal to 1,and Brian thinks price elasticity of demand equals zero.
C)Tina thinks the demand for CDs is price elastic,and Brian thinks it is price inelastic.
D)Tina thinks the demand for CDs is price inelastic,and Brian thinks it is price elastic.
E)Tina and Brian both think the demand for CDs is unit elastic.

Question

Quizplus · Accepted Answer

Tina and Brian hold opposite opinions about the effect of price on demand. Tina thinks the company should increase the price, which indicates that she believes the demand for CDs is price inelastic - meaning that a change in price will not have a substantial effect on the quantity demanded. On the other hand, Brian thinks the company should lower the price, which indicates that he believes the demand for CDs is price elastic - meaning that a change in price will have a significant effect on the quantity demanded. Therefore, option D is the correct choice.

Tina and Brian Work for the Same Recording Company