Question

if a union argues that a price cut will boost revenues of the firm and management argues that the opposite is true, then the price elasticity of demand is:

Answer 1

Then the price elasticity of demand is Elastic from the union perspective; inelastic from the managements perspective.

• A measure of a product's change in consumption in response to a change in price is called price elasticity of demand.
• If the price elasticity is infinite, then a good is perfectly elastic.
• A good is elastic if its price elasticity exceeds 1; it is inelastic if it is less than 1.
• A good is completely inelastic if its price elasticity equals zero (no price change, no matter how small, results in a change in demand).
• Unitary elasticity refers to price elasticity that is exactly 1 (a change in price causes a change in demand that is exactly the same percentage).
• A product's elasticity is impacted by the accessibility of a substitute.

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