When Joe's Coffee Nook raised the price of a latte, Joe noticed a substantial change in his daily latte sales. A price reduction caused his sales to increase. From this information, you can assume the demand for lattes is ________.
A) static
B) supply-driven
C) cross-elastic
D) elastic
E) inelastic

Question

Quizplus · Accepted Answer

The fact that a price reduction caused an increase in sales suggests that the demand for lattes is elastic. Elastic demand means that a change in price has a significant impact on the quantity demanded by consumers. If demand were inelastic, a price change would have little effect on the quantity demanded.

When Joe's Coffee Nook Raised the Price of a Latte