Shaina and Mariah have a business that provides personal fitness training services. They know that after raising their prices from $50 to $75 per hour, the quantity of hours they spent delivering training services fell from 90 to 80 hours per week. The demand for their services is:
A)inelastic, with a price elasticity coefficient greater than one.
B)inelastic, with a price elasticity coefficient less than one.
C)elastic, with a price elasticity coefficient greater than one.
D)elastic, with a price elasticity coefficient less than one.

Question

Shaina and Mariah have a business that provides personal fitness training services. They know that after raising their prices from $50 to $75 per hour, the quantity of hours they spent delivering training services fell from 90 to 80 hours per week. The demand for their services is:
A)​inelastic, with a price elasticity coefficient greater than one.
B)​inelastic, with a price elasticity coefficient less than one.
C)​elastic, with a price elasticity coefficient greater than one.
D)​elastic, with a price elasticity coefficient less than one.

Quizplus · Accepted Answer

The decrease in quantity demanded (from 90 to 80 hours per week) is less than the increase in price (from $50 to $75 per hour), indicating an inelastic demand. The price elasticity coefficient would be calculated as [(80-90)/((80+90)/2)] / [(75-50)/((75+50)/2)] = -0.67, which is less than one, confirming the inelasticity of demand.

Shaina and Mariah Have a Business That Provides Personal Fitness