If Sam, the Pizza Man, lowers the price of his pizzas from $6 to $5 and finds that sales increase from 400 to 600 pizzas per week, then the demand for Sam's pizzas in this range is:
A) price inelastic.
B) price elastic.
C) unit elastic.
D) cross elastic.
E) income inelastic.

Question

Quizplus · Accepted Answer

The increase in sales by 200 pizzas (from 400 to 600) suggests that the consumers are sensitive to the price change. Therefore, the demand for Sam's pizzas in this price range is price elastic.

If Sam, the Pizza Man, Lowers the Price of His