Apple Introduced the IPhone to the Market in June 2007

question 146

Multiple Choice

Apple introduced the iPhone to the market in June 2007.Within two months,it had become clear that the price elasticity of demand for iPhones was

• A) significantly higher than had been expected.
• B) very close to original estimates.
• C) significantly lower than had been expected.
• D) essentially unit elastic.

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Definitions:

Price Elasticity

The degree of interplay between a good's demanded quantity and its price movement.

Midpoint Method

The midpoint method is a technique used in economics to calculate the elasticity of a variable by dividing the percentage change in the quantity demanded or supplied by the percentage change in price, using the midpoint between two values as the base of calculation.

Price Elasticity

An evaluation of demand sensitivity to price variations for a given item.

Mad Cow Disease

A fatal neurodegenerative disease in cattle that can be transmitted to humans, causing a variant of Creutzfeldt-Jakob Disease.