The Shoe Emporium reduces the price of its shoes by 50% and finds that the quantity demanded for its shoes more than doubles.The demand for shoes from The Shoe Emporium appears to be:

Question

Quizplus · Accepted Answer

The fact that the quantity demanded more than doubles in response to a price decrease of 50% indicates a relatively high degree of price sensitivity among consumers. This suggests that demand for shoes from The Shoe Emporium is elastic. Elastic demand means that changes in price are proportional to changes in quantity demanded, implying that a price reduction leads to a more than proportionate increase in quantity demanded, and vice versa.

The Shoe Emporium Reduces the Price of Its Shoes by 50