Discuss AMA PCM Exam Topic 5 Question 85

Novel Electronics sold 400 Technova smartphones in the first week of October 2013 at a price of $250 per unit. The following week, it reduced the price to $230 per unit and it saw sales increase by 20%. What is the price elasticity of demand of Technova smartphones?

Suggested Answer: B

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35 comments · newest first

Rachael 10 months ago

Wait, is the demand really that responsive? Sounds high!

Paulene 11 months ago

I disagree, it feels more like 2 to me.

Shalon 11 months ago

I think the elasticity is around 1.5.

Ora 11 months ago

Sales went up by 20% after the price cut!

Sheldon 11 months ago

The price dropped from $250 to $230.

Maynard 12 months ago

I feel like I should just plug in the numbers and see what I get. The price change seems significant enough to suggest a higher elasticity.

Keneth 12 months ago

This question reminds me of a similar one we did in class. I think the elasticity might be around 1.5, but I'm not completely confident.

Irene 12 months ago

I think the increase in sales by 20% after the price drop is a key factor. It feels like it might be elastic, but I can't recall the exact numbers.

Solange 1 year ago

I remember we practiced calculating price elasticity, but I'm not sure if I got the formula right for this one.

Rossana 1 year ago

Wait, what? I'm totally lost on this question. I don't even know where to start. Guess I'll have to guess and hope for the best.

Wilford 1 year ago

Okay, I got this. The key is to calculate the percent change in quantity demanded and the percent change in price, then plug those into the price elasticity formula. I'm feeling confident I can work through this step-by-step.

Angelyn 1 year ago

Hmm, I'm a bit unsure about this one. I know we covered price elasticity in class, but I'm having trouble remembering the exact steps to solve this. Maybe I should review my notes before attempting it.

Felix 1 year ago

This looks like a classic price elasticity of demand problem. I think I can handle this if I remember the formula and plug in the right numbers.

Bette 1 year ago

Okay, the key is to right-click on the axis and check the "values in reverse order" box. That should do the trick!

Gwenn 1 year ago

Easy peasy! If the XML schemas are the same, then the data models must be the same. That's a no-brainer.

Talia 1 year ago

Okay, let me think this through. Prisma Cloud is a cloud security platform, and Terraform is an infrastructure as code tool. So to configure a Prisma Cloud build policy in Terraform, I'd guess the necessary query would be in Terraform syntax, not CloudFormation or JSON or YAML.

Zoila 1 year ago

Wait, isn't price elasticity of demand always a positive number? I thought the formula was (% change in quantity) / (% change in price). If that's the case, then the answer should be C) 1.5.

Eleonora 1 year ago

Haha, I bet the exam writers are hoping to catch us out with this one. Gotta love those trick questions! I'm going to go with D) 2, just to keep them on their toes.

Isabelle 1 year ago

↳ replying to Eleonora

I'm not sure, but I'll go with C) 1.5 just to mix things up.

Golda 1 year ago

↳ replying to Eleonora

I agree with you, I also think the answer is B) 1.

Marleen 1 year ago

↳ replying to Eleonora

I'm going with B) 1, it seems like a reasonable choice based on the information given.

Maryanne 1 year ago

↳ replying to Eleonora

I think the answer is A) 0.5, because the price decrease led to a 20% increase in sales.

Wilda 1 year ago

This is a tricky one. The question gives us the price and sales changes, but we need to calculate the price elasticity formula to get the right answer. I'll give it a shot with C) 1.5.

Charisse 1 year ago

↳ replying to Wilda

I believe the correct answer is A) 0.5, not C) 1.5.

Arlette 1 year ago

↳ replying to Wilda

So if sales increased by 20% when the price decreased from $250 to $230, we can calculate the price elasticity using that information.

Olive 1 year ago

↳ replying to Wilda

I think the formula for price elasticity is the percentage change in quantity demanded divided by the percentage change in price.

Lorrie 2 years ago

I'm not sure about this one. Shouldn't the price elasticity be somewhere between 0 and 1 since the demand for Technova smartphones seems relatively inelastic? I might go with B) 1.

Howard 1 year ago

↳ replying to Lorrie

Yes, that sounds like the most reasonable choice based on the information given.

Ardella 1 year ago

↳ replying to Lorrie

So, would you go with option A) 0.5 then?

Gaston 1 year ago

↳ replying to Lorrie

I agree. Since the demand increased by 20% when the price decreased by 8%, it seems like the price elasticity is around 0.5.

Sean 1 year ago

↳ replying to Lorrie

I think you're on the right track. The price elasticity of demand for Technova smartphones is definitely less than 1.

Mauricio 2 years ago

Hmm, this question is testing our knowledge of price elasticity of demand. I think the answer is C) 1.5, since a 20% increase in sales due to a 8% decrease in price (from $250 to $230) would suggest a price elasticity of demand of around 1.5.

Frankie 2 years ago

I'm not sure, but I think the answer is B) 1.

Mattie 2 years ago

I agree with Fredric, because the sales increased by 20% when the price was reduced by 8%.

Fredric 2 years ago

I think the price elasticity of demand is 1.

AMA PCM Exam - Topic 5 Question 85 Discussion