In the 2010 holiday season, Steve Richardson decided to cut the prices of his ha

Question

In the 2010 holiday season, Steve Richardson decided to cut the prices of his hand-crafted wooden puzzles to increase sales. According to a newspaper account, "the number of orders at Stave Puzzles Inc., his Norwich, Vt. business, hasn't been enough to offset the price cuts." Source: Emily Maltby, "In Season of Big Discounts, Small Shops Suffer," Wall Street Journal, November 24, 2010. The demand for these puzzles must be perfectly inelastic because the percentage increase in the quantity demanded for orders is not dependent on the percentage decrease in price of the puzzles. must be inelastic because the percentage increase in the quantity demanded for orders is less than the percentage decrease in price of the puzzles. must be unit elastic because the percentage increase in the quantity demanded for orders is equal to the percentage decrease in price of the puzzles. must be elastic because the percentage increase in the quantity demanded for orders is more than the percentage decrease in price of the puzzles.

Explanation / Answer

B is the right option.

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