Richard Anderson, an entrepreneur residing in Arizona, noticed that many of his friends and neighbours complained of the intense heat during the summer months. In order to make the heat more bearable, Anderson developed and marketed a simple cooling system that sprayed a fine mist of water into the air. The system attached easily to patio roofs, backyard fences, and even golf carts. Since introducing the product on the market, Anderson has discovered that relatively small changes in the price of the system lead to relatively large changes in demand for his product. The demand for Anderson's product is:

Question

Quizplus · Accepted Answer

The fact that relatively small changes in price lead to relatively large changes in demand indicates that the demand for Anderson's product is price elastic. This means that consumers are sensitive to changes in the price of the product and are likely to adjust their purchasing behavior accordingly.

Richard Anderson, an Entrepreneur Residing in Arizona, Noticed That Many