Assume that the market for pencils is in equilibrium and that demand is very price elastic.The popularity of digital tablets and electronic pens increases and demand for pencils declines.The equilibrium change in quantity demanded is
A) zero.
B) relatively small.
C) proportional to the shift in demand.
D) relatively large.
E) infinite.

Question

Quizplus · Accepted Answer

If demand for pencils declines due to the popularity of digital tablets and electronic pens, the equilibrium change in quantity demanded will be relatively large because demand is very price elastic. This means that a small change in price will cause a relatively large change in quantity demanded. Therefore, the decline in demand for pencils will cause a significant decrease in the quantity demanded of pencils.

Assume That the Market for Pencils Is in Equilibrium and That