Iron Mike's steel mill finds that a 10 percent increase in its price leads to a 14 percent decrease in the quantity it is able to sell. What term accurately describes the demand curve for the mill's output?
A) inelastic
B) elastic
C) unit elastic
D) perfectly elastic

Question

Quizplus · Accepted Answer

The fact that a 10 percent increase in price leads to a 14 percent decrease in quantity sold implies a responsiveness of demand to price changes greater than 1 (14/10 > 1). This means that the demand curve is elastic.

Iron Mike's Steel Mill Finds That a 10 Percent Increase