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If Sam the Pizzaiolo lowers the price of their pizzas from to and finds that sales increase from 400 to 600 pizzas per week, then the demand
for Sam’s pizzas in this range is:
a. elastic.
b. Inferior.
c. Inelastic.

Ask by Kelly Ross. in the United States
Jan 24,2025

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The demand for Sam’s pizzas is elastic.

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Let’s break this down! The demand for Sam’s pizzas is considered elastic because a decrease in price from $6 to $5 led to a significant increase in quantity demanded from 400 to 600 pizzas. This means customers are sensitive to price changes, buying much more pizza when the price drops, which is a hallmark of elastic demand.
Now, to put this into a real-world context: businesses often adjust their pricing strategies based on demand elasticity. If they find their product has elastic demand, like Sam’s pizzas, lowering prices can lead to higher total revenue as more customers flock to buy them. This strategy can effectively boost sales, particularly for popular items!

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