Suppose a firm in each of the two markets listed below were to increase its price by 30 percent.In which pair would the firm in the first market listed experience a dramatic decline in sales,but the firm in the second market listed would not?

Question

Quizplus · Accepted Answer

In the cable television and gasoline markets, the firm in the first market (cable television) would experience a dramatic decline in sales because it is a discretionary purchase, while the firm in the second market (gasoline) would not because it is a necessity.

Suppose a Firm in Each of the Two Markets Listed