Question

If washburn guitars were to lower the price of the maya pro dd75 to $2,499 from $2,699, sales of the guitar would increase 30 percent. This illustrates:.

Answer 1

The effect of the decrease in the price of the guitars illustrates an elastic demand.

What does the price change illustrate?

The first step is to determine the percentage change in the price of the guitars.

Percentage change in price = (2499 / 2699) - 1 = -0.074 = -7.4%

Now, determine the price elasticity of demand =30 /  -7.4% = -4.1

The coefficient of elasticity is greater than 1 in absolute terms, thus the demand is elastic.

To learn more about price elasticity of demand, please check: https://brainly.com/question/18850846

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