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Author Question: In 2012 Nike reduced the price of its running shoes by 20 percent. As a result, the substitution ... (Read 51 times)

DelorasTo

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on: Jun 29, 2018
In 2012 Nike reduced the price of its running shoes by 20 percent. As a result, the substitution effect caused
 
  A) the demand for Nike shoes to increase.
  B) people to switch from Adidas shoes and buy more Nikes.
  C) the relative price of Nikes to increase.
  D) the demand curve for Nikes to shift rightward.

Question 2

What is the price elasticity of demand and how is it measured?
 
  What will be an ideal response?


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xiaomengxian

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Reply #1 on: Jun 29, 2018
Answer to Question 1

B

Answer to Question 2

The price elasticity of demand is a unit-free measure of responsiveness of the quantity demanded of a good to a change in its price when all other influences on buyers plans remain the same. To calculate the price elasticity of demand we divide the percentage change in quantity demanded by the percentage change in price.


DelorasTo

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Reply 2 on: Jun 29, 2018
Thanks for the timely response, appreciate it

Zebsrer

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Reply 3 on: Yesterday
Wow, this really help

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