Scenario 19.1 Use the following to answer the questions.
Concession Supply sells hotdogs, buns, and nacho ingredients to several major league ballparks across the country. Currently, Concession Supply has the following pricing information for one case of hotdogs sold at Wrigley Field: Total fixed costs = $1,200, Selling price = $16, and Variable costs = $6.
Refer to Scenario 19.1. If Concession Supply increased its price by 10% and experienced only a 2% decrease in the demand for hotdogs, the demand would be
A) inelastic.
B) common.
C) prestige.
D) elastic.
E) marginal.

Question

Quizplus · Accepted Answer

When the price of a product is increased and the quantity demanded decreases by a smaller percentage, the demand is considered inelastic. This means consumers' purchase quantity does not significantly change with price changes. In this scenario, a 10% price increase leading to only a 2% decrease in demand indicates inelastic demand.