Vivian conducted market research on her company’s products. She found that after the company raised the price of its product by $1.50, the demand in the uptown region remained the same with only minor fluctuations. However, she found that the demand in the downtown region dropped by 20 percent after the price change. How should Vivian take these demands into consideration? In a situation where demand differs in different areas, Vivian should consider the ____ demand.

Vivian should consider what causes the great difference between the price elasticity of demand (PED) between the uptown region and the downtown region.

The PED is determined by dividing the relative change in quantity demanded divided by the relative price change. A PED higher than 1 means the product has an elastic demand, PED equals 1 the product has a unit elastic demand, and a PED lower than 1 means that the product has an inelastic demand.

We are not told what was the relative change in price, but we can assume that the product's PED in the downtown region was more elastic than the demand in the uptown region. This change can be explained by different factors:

we can assume that the customers in the uptown region are wealthier, therefore a change in the price will not affect their purchasing decisions
maybe the customers in the uptown region need that product more, for example gasoline
or different customer preferences and availability of substitute products may cause the difference